BY KUDZAI KAWAZA THE Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) has claimed that the recent monetary policy measures have helped to stabilise the economy which had been battered by currency volatility.
In a statement yesterday, the MPC projected that the annual inflation rate will end the year on 60%.
The statement comes after the MPC held a meeting last Friday, where the RBZ said the monetary policy decisions it took helped to stabilise the ailing economy.
“The committee noted with satisfaction that the previous monetary policy decisions have helped to stabilise the exchange rate and domestic prices. In particular, the recent monetary policy measures have reversed the upward trend on month-on-month inflation, which rose from 4,2% in August 2021 to 6,4% in October 2021, and decelerated to 5,76% in November 2021,” the MPC statement read.
The RBZ projected that month-on-month inflation would continue declining to low and sustainable levels, adding that annual inflation would end the year at between 58% and 60% and will be less than 20% in 2022.
The central bank said, as a result of the obtaining macroeconomic stability, the MPC resolved to maintain the bank policy rate at 60%, and the medium-term bank accommodation facility interest rate at 40%, as well as maintain statutory reserve requirements for demand/call deposits at 10% and 2,5% for savings and times deposits.
It also maintained the minimum deposit rates for Zimbabwe dollar savings and time deposits at 10% and 20%, respectively with a view to sustaining the appeal of the local unit as an investment currency, as well as maintaining reserve money growth targets at 10% for the fourth quarter of 2021 and the first and second quarters of 2022.
The committee, the RBZ said, had affirmed its commitment to continue refining the bank’s open market operations instruments to support optimal liquidity management.
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“In view of the significant increase in total bank deposits during the past year, the committee also resolved to monitor developments on broad money to minimise its possible destabilising effects on inflation and the exchange rate,” the RBZ said.
The MPC also resolved that, in view of the forthcoming festive season, the last foreign currency auction for 2021 would be on December 14 and the first auction for 2022 would be on January 11.
RBZ said it was satisfied with progress made in clearing the ring-fenced auction backlog allotments that had crippled the operations of companies and had slowed down production.
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