The Reserve Bank of Zimbabwe has cut its policy rate from 30% to 27.5%, citing continued price and exchange-rate stability as it seeks to support economic growth without weakening inflation control.
The cut, announced by the Monetary Policy Committee on Monday, brings the total reduction in the policy rate since June to 7.5 percentage points.
The central bank also reduced the interest rate on its Targeted Finance Facility from 15% to 12.5%, while maintaining a 22.5% cap on banks’ all-inclusive lending rates to productive sectors.
The MPC said the latest decision was made against a backdrop of improving inflation conditions and stronger economic activity.
“Annual ZiG inflation declined to 2.9% in August 2026, its lowest level since 1980, before rising modestly to 3.7% in September 2026,” the MPC said.
It attributed the September increase largely to rising international oil prices, which exceeded US$100 a barrel on September 9, while noting that monthly inflation had averaged 0.4% between January and September.
The central bank expects annual inflation to remain below 7% by the end of the year.
The MPC maintained its forecast for 5% economic growth in 2026, supported by mining and agriculture.
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Foreign currency inflows rose 37.8% to US$14.3 billion in the eight months to August, from US$10.3 billion during the same period last year.
The stronger external position also lifted foreign currency reserves backing ZiG to more than US$2 billion in September, equivalent to about two months of import cover.
The MPC said the reduction in the policy rate should not be interpreted as a shift towards loose monetary policy.
“The reduction in the Bank policy rate does not signal monetary easing, but a realignment of the policy rate to the observed inflation dynamics,” it said.
The bank said it was instead pursuing a gradual normalisation of monetary policy as inflation expectations remain anchored.
For businesses, the lower policy rate could reduce the cost of accessing central-bank-supported productive-sector finance, although the extent to which commercial borrowing costs fall will depend on how banks transmit the change.
The MPC retained statutory reserve requirements at 30% for demand deposits and 15% for savings and time deposits.
It also maintained minimum interest rates on savings and time deposits and will continue issuing the ZiG-Denominated Term Deposit Facility to encourage domestic savings and develop a local-currency yield curve.
The central bank said it would continue monitoring risks from geopolitical tensions and forecast El Niño conditions during the 2026/27 agricultural season.
“The Committee will seek to balance risks to inflation and growth, while ensuring that inflation expectations remain firmly anchored in the short to medium term,” the MPC said.
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