THE government has defended Zimbabwe’s high interbank policy rate, arguing that tough monetary measures introduced in 2024 were necessary to stabilise the economy and tame inflation, even as concerns persist over the impact of expensive borrowing on businesses and economic growth.
Responding to a question in the National Assembly from Mbizo legislator Corban Madzivanyika, Finance, Economic Development and Investment Promotion minister Mthuli Ncube said authorities were cautiously managing monetary policy to maintain single-digit inflation and avoid another cycle of economic instability.
Madzivanyika had asked government to explain its policy regarding adjustment of the interbank policy rate to ensure it effectively aligns with efforts to maintain low inflation.
In response, Ncube defended the Reserve Bank of Zimbabwe’s decision to sharply tighten the monetary policy in September 2024, when the bank rate was increased to 35% and reserve requirements raised to 30% for both local and foreign currency deposits.
“I expect the honourable members of this august House to applaud the government’s efforts to stabilise the exchange rate and inflation we are seeing today,” Ncube told Parliament.
“This did not happen overnight, but it has been a long journey, arising from reform measures implemented by the government working closely with the central bank.”
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The minister said the measures were aimed at curbing excess liquidity, reducing speculative behaviour and restoring macroeconomic stability.
According to Ncube, the interventions helped stabilise the exchange rate from October 2024, while inflation declined to single-digit levels, currently standing at 4,1% in 2025.
Zimbabwe has battled years of currency volatility, soaring inflation and policy inconsistency, which have repeatedly eroded public confidence in the local currency and weakened household purchasing power.
Authorities introduced the structured currency, Zimbabwe Gold (ZiG), in April 2024 as part of broader efforts to restore stability after the collapse of the Zimbabwe dollar amid rapid depreciation and inflationary pressures.
Since then, government has relied on tight fiscal and monetary controls to defend the currency and contain inflation.
However, economists and industry players have warned that high interest rates also make borrowing prohibitively expensive for businesses, particularly manufacturers and small enterprises already struggling with high operating costs and limited access to capital.
Ncube acknowledged that the current policy rate remained high relative to inflation levels, but insisted authorities were acting cautiously to avoid reversing recent gains.
“Yes, we fully acknowledge that the policy rate is high given the current levels of inflation and we understand why that decision was taken in the first place,” he said.
“Empirical evidence points to the fact that early loosening of the monetary policy could result in inflation resurgence, hence the Monetary Policy Committee (MPC) is exercising caution not to loosen monetary policy prematurely.”
The minister indicated that gradual easing of the policy rate could be expected if inflation remains subdued and market conditions remain stable.
“With the current low inflation, we expect the MPC to begin easing the policy rate gradually, while monitoring market developments,” Ncube said.
“This measured approach is intended to support economic growth while at the same time safeguarding price stability.”
Ncube said government viewed macroeconomic stability as essential for long-term economic recovery, arguing that maintaining discipline in fiscal and monetary management was necessary to avoid repeating past economic crises.
“These are not easy decisions,” he told the House.
“They are tough, but they are necessary.
“Without stability, there can be no sustainable economic growth.”