RBZ Introduces Targeted Finance Facility, Keeps ...

RBZ Introduces Targeted Finance Facility, Keeps Tight Monetary Policy

Nyashadzashe Ndoro

Chief Reporter

The Reserve Bank of Zimbabwe has resolved to maintain its current tight monetary policy stance, citing the need to keep inflation expectations anchored.

The MPC also introduced a Targeted Finance Facility to support the productive sector and minimise the impact of tight liquidity conditions on economic growth. The operational modalities of the facility will be communicated to banks in due course.

This decision was made during the Monetary Policy Committee meeting held on December 3, 2024.

According to the MPC, the measures announced on September 27, 2024, have been successful in tightening liquidity conditions and curbing speculative activities in the foreign exchange market. As a result, the exchange rate and inflation have relatively stabilised since October 2024.

The MPC noted that the exchange rate premium has significantly narrowed, and month-on-month inflation has decelerated from 37.2% in October 2024 to 11.7% in November 2024. The spike in month-on-month inflation in October was attributed to the once-off depreciation of the Zimbabwean dollar against the US dollar in September 2024.

To maintain the current monetary policy stance, the MPC resolved to maintain the bank policy rate at 35%, keep statutory reserve requirements for savings and time deposits at 15% and for demand and call deposits at 30% and continue to improve the efficiency of the price discovery mechanism of the interbank foreign exchange market.

The RBZ governor, John Mushayavanhu, stated that the MPC will continue to review its policy stance in line with exchange rate and inflation developments.