THE Parliamentary Portfolio Committee on Budget and Finance has ordered the Reserve Bank of Zimbabwe (RBZ) to slash the bank policy rate by June 30, arguing that high borrowing costs are strangling businesses despite a sharp decline in inflation.
In its 2026 Monetary Policy report, the committee said the current policy rate of 35% was no longer tenable, given that annual ZiG inflation fell from 95,8% in July 2025 to 4,1% in January 2026, before edging to 4,84% in April.
The committee said maintaining the current policy rate risks undermining productive sectors.
“Such price stability should naturally warrant a downward revision of the policy rate, as borrowing costs remain prohibitive for businesses seeking to finance capital and working capital requirements,” the committee said.
Industry players expected a modest reduction to around 30% as a signal of macroeconomic stability.
Instead, the current 35% rate “reflects RBZ’s cautious stance, acknowledging the possibility of renewed inflationary pressures,” the report noted.
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Despite the inflation collapse, local currency lending rates remain trapped between 40% and 47%, while US dollar loans cost 11-18%.
The committee said a 35% policy rate against 4,84% inflation “appears disproportionate when compared with regional peers.”
Other countries have long adopted far lower policy rates in stable inflationary environments.
South Africa’s repo rate has traded in single to low-double digit under comparable conditions.
The committee said the central bank should gradually reduce the rate while keeping an eye on prices.
“Gradual downward adjustments would be prudent, balancing the need for caution with the imperative of supporting productive investment.”
The economy has suffered chronic hyperinflation and currency instability for two decades.
The ZiG currency, introduced in 2024 as the latest attempt to establish a stable currency in over a decade, initially struggled for credibility.
The committee welcomed the RBZ’s 2026 Monetary Policy Statement as a “credibility instrument” to defend exchange-rate stability and reset expectations.
It also noted recent reductions in bank charges and higher mobile money transaction limits.
The committee recommended that RBZ and Finance ministry maintain tight monetary and fiscal policies, but remain responsive to liquidity conditions.
Any transition to a mono-currency system, the committee said, should be condition-based and tied to measurable economic benchmarks.
RBZ has less than two months to act.
If it misses the June 30 deadline, the committee indicated that it might resort to legislative intervention to force borrowing costs down.