Zimbabwe: RBZ MPC Resolves to Stay the Course of Stability

29 July 2023
New Zimbabwe (London)
By Alois Vinga

The Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee (MPC) has resolved to stay the course of stability which is currently taking shape by avoiding implementing new measures.

Both the fiscal and monetary authorities worked flat out in the first half of the year implementing a series of measures to ease unsustainably high inflation rates and a depreciating exchange rate on the back of the ZWL decline.

The ZWL traded at a high of US$1:ZW$8 000 around June 2023 and after the implementation of measures like cutting back on money supply, gold-backed digital tokens and improved usage of the local currency to include its acceptance through the payment of taxes.

In turn, such measures have yielded positives which have seen the ZW$ recovering to a current premium of US$1: ZWL 4 505 among other gains.

Consequently, month-on-month inflation, which peaked at 74.5% in June 2023, fell to minus 15.3% in July 2023, while annual inflation fell from 175.8% in June 2023 to 101.3% in July 2023.

In a statement released shortly after a meeting on Friday, RBZ Governor John Mangudya said the MPC resolved to give the measures a chance to take the toll.

"The MPC also noted that economic fundamentals are strong to sustain the current stability, as reflected by the robust economic growth of 5,3% expected in 2023, a favorable balance of payments position and fiscal sustainability.

"The strong economic fundamentals, coupled with stability in prices, will be critical in preserving the value of the domestic currency and enhancing confidence in the economy.

"In view of the current positive inflation and exchange rate developments, the MPC resolved to stay the course of the current tight monetary policy stance and allow time for the current measures to take the full course of their impact on the dual currency economy," he said.

The MPC committed to remain watchful of any potential shocks by putting in place appropriate safeguard measures to ensure that the economy remains on track to achieving price and exchange rate stability to support the strong economic fundamentals.

"The MPC will continue to review monetary policy measures on a regular basis in line with month-on-month inflation developments and monetary conditions," added Mangudya.

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