Zimbabwean Central Bank sets below 10% inflation target

RBZ governor Dr John Mangudya

RESERVE Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, has unveiled his 2021 Monetary Policy Statement, which targets an ambitious 10 percent annual inflation by the end of the year and maintaining the gains of financial stability achieved by the previous policy interventions.

Among other measures the Monetary Policy Statement proposes increasing daily withdrawal limits to $2 000, introducing the $50 note and taming money supply growth with a bank rate policy of up to 40 percent from 35 percent and a mid-term lending rate to the productive sector up at 30 percent from 25 percent.

Anchored on the theme: “Staying on course in fostering price and financial system stability”, Dr Mangudya said the proposed measures are expected to support the attainment of the envisaged economic growth of 7.4 percent in 2021, in line with the country’s National Budget estimates.

“The measures presented in this Statement are expected to support the attainment of the envisaged economic growth of 7.4 percent in 2021 and to control inflation to below 10 percent by the end of December 2021,” said Dr Mangudya.

“The bank’s focus on fostering price and financial system stability in the economy requires team effort by all Zimbabweans to enhance self-discipline and compliance, and to cherish economic progress.

“Thus, sustaining the current economic stability that was brought about by the conservative monetary targeting framework, the auction system, fiscal discipline and efficacy in the mobile banking system is paramount and needs to be preserved, safeguarded and sustained.”

Citing prospects of increased food production due to a favourable agriculture season, the RBZ Governor said inflationary pressures were expected to remain subdued in the short to medium term.

“As a result, the economy is expected to continue experiencing a gradual disinflation from the 362.6 percent annual inflation in December 2020 to below 10 percent by December 2021.

“This inflation path will be underpinned by a targeted month-on-month inflation rate of below three percent.

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