RBZ governor John Mangudya presents Monetary Policy Statement to parly

The current inflationary pressures within the national economy require the Bank to further tighten monetary policy to stem exchange rate volatility and anchor inflation expectations, whilst at the same time safeguarding the ongoing recovery of the economy, says Reserve Bank of Zimbabwe, Governor John Mangudya.

The RBZ governor says in this context, the Bank is putting in place the following measures to curb inflationary pressures, stabilise the exchange rate and support the recovery of the economy from the effects of the Covid-19 pandemic.

“RBZ will also continue with its aggressive liquidity management policy by aligning its Open Market Operations (OMOs) to liquidity injections by Government to avoid excess liquidity in the banking system emanating mainly from payments for infrastructural development projects.

“In order to avoid further build-up on inflationary pass-through effects currently emanating from exchange rate indexation & the elevated global inflation pressures, the Bank policy rate & the Medium Term Accommodation (MBA) Facility interest rate will be maintained at the current levels of 60% and 40%, respectively.

“The Bank, through the Monetary Policy Committee (MPC), will continue monitoring monetary and financial conditions and their implications on interest rate policy for possible future adjustments,” he says.

Mangudya adds that the Bank shall maintain statutory reserve requirements for demand/ call deposits and savings and time deposits at current levels of 10% and 2.5%, respectively, to promote savings and time deposits, while discouraging unproductive credit creation.

“The Bank shall continue to fine tune the exchange rate policy which is premised on the foreign exchange auction system to focus on exchange rate flexibility and promotion of external competitiveness as well as tackling rent-seeking behaviour.

“The Bank shall continue to fine tune the exchange rate policy which is premised on the foreign exchange auction system to focus on exchange rate flexibility and promotion of external competitiveness as well as tackling rent-seeking behaviour,” he adds.

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