Zimbabwe’s central bank aims for a tight monetary policy in 2025, maintaining a 35% bank policy rate and targeting 6% economic growth. Inflation is expected to fall to below 3% monthly, though annual rates may spike temporarily. The RBZ has removed trading limits on the interbank forex market and introduced a finance facility for wholesalers and retailers.
Zimbabwe’s central bank is committed to a tight monetary policy to foster economic growth in 2025, according to Governor John Mushayavanhu. In a recent monetary policy statement, he affirmed that this approach is intended to ensure stability while promoting economic expansion. The Reserve Bank of Zimbabwe (RBZ) will maintain the bank policy rate at 35% per annum, reviewing it based on inflation trends and market conditions.
Mushayavanhu emphasized the importance of maintaining a stringent monetary policy to stabilize prices, currency, and exchange rates as the economy is projected to grow by 6% in 2025, up from last year’s 2%. Factors contributing to this optimistic outlook include enhanced stability in prices and exchange rates, alongside expected recoveries in agriculture and the power sector.
Inflation is anticipated to decrease, with monthly averages expected to remain below 3% throughout 2025, in line with steady exchange rates. However, annual inflation may rise temporarily due to base effects from significant monthly inflation spikes observed in October 2024, before stabilizing at 20-30% by year-end.
Additionally, the RBZ has lifted all trading limits on the foreign exchange interbank market to ensure ongoing stability. To support wholesalers and retailers facing financing challenges, a specialized financial facility has been introduced to assist them in restocking goods.
Zimbabwe’s monetary policy has significant implications for its economic landscape, especially in light of past hyperinflation and economic instability. The central bank’s decisions regarding interest rates and exchange rates play a critical role in influencing inflation and ensuring that economic growth remains sustainable. Understanding the objectives behind their monetary strategy is essential for stakeholders and investors, as it affects pricing, inflation expectations, and overall market behavior.
In conclusion, Zimbabwe’s central bank aims to create a stable economic environment through a strict monetary policy, with an emphasis on maintaining the bank policy rate at 35%. The anticipated recovery in key sectors is expected to drive economic growth to 6% in 2025, accompanied by a decline in inflation rates. Lifting limits on foreign exchange trading shows a proactive approach to ensuring market stability.
Original Source: daijiworld.com
