RBZ Gives In to Inflationary Pressures
By Delicious Mathuthu
The Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) has given in to some economic inflationary pressures as the country continues the fight for a stable economy and currency.
Following a meeting on Friday (September 27, 2024) to address recent economic developments and outlook, the MPC said, despite stability from April to mid-August 2024 the economy faces exchange rate pressures and inflationary increases since late August.
Reserve Bank of Zimbabwe (RBZ) Governor, Dr. John Mushayavanhu, in a statement, said the MPC noted that month-on-month inflation averaged -0.82% from May to July 2024, but increased to 1.4% in August 2024, with expectations of further increases in September.
Foreign currency inflows rose by 13.4% to US$8.465 million from January to August 2024, he said.
To address these challenges, the MPC resolved to increase the Bank Policy rate from 20% to 35% effective immediately.
Statutory reserve requirements for demand and call deposits will be standardized at 30% for both local and foreign currency deposits.
They also said Reserve Bank requirements for savings and time deposits will also rise to 15%.
Additionally, the MPC will allow greater exchange rate flexibility to reflect increased demand for foreign currency, Dr. Mushayavanhu said.
Individuals will now be limited to taking US$2,000 out of the country, down from US$10,000.
Dr. Mushayavanhu said they are confident in the new measures.
“The MPC is convinced that the above measures will go a long way in addressing the emerging exchange rate risks, anchor the inflation expectations and stabilise prices in the near to short term.
“Going forward, the MPC will remain vigilant to any emerging risks to ensure continued macro-economic stability,” he said.
