HARARE – The Reserve Bank of Zimbabwe (RBZ) projects the country’s annual inflation rate will progressively decline to 55 percent by end of July and drop below 25 percent by year-end.
In a statement on Wednesday following the Monetary Policy Committee (MPC) meeting on June 28, the central bank indicated it was satisfied with the current “disinflationary trajectory”.
“The Committee noted with satisfaction the current macroeconomic stability and the strong positive growth trajectory that is underway, a position which has also been confirmed by the International Monetary Fund (IMF), the World Bank and the African Development Bank,” read part of the statement.
The bank decided to maintain its bank rate and interest rate on medium-term accommodation at 40 percent and 30 percent, respectively.
It also resolved to tighten its reserve money growth target to 20 percent per quarter from 22,5 percent in order to keep a tight leash on inflation and anchor exchange rate stability.
The central bank also undertook to realign the foreign currency auction system to ensure “the country’s productive sector is given priority in terms of allotments”.
While foreign currency deposits in local banks have risen to more than US$1,3 billion, monetary authorities, in consultation with the Depositors Protection Board, are actively considering mechanisms to protect forex deposits.
“Consultations are also ongoing to encourage banks to leverage on the foreign currency deposits to enhance financial intermediation for the benefit of the economy,” said the RBZ. – Herald