Ronald ZvendiyaTHE Reserve Bank of Zimbabwe (RBZ) issued the Mid-Term Monetary Policy Statement on August 11 2022.
The theme is “Restoring Price and Exchange Rate Stability,” which means that the RBZ’s major concern is significantly reducing inflation and curbing persistent exchange rate depreciation.
Accordingly, the Mid-Term Monetary Policy Statement highlights the recent developments in monetary, external and banking sectors as well as policy measures the bank is implementing in pursuit of price, exchange rate and financial system stability, which are the key mandates of the RBZ.
More importantly, the Mid-Term Monetary Policy Statement also outlines the monetary policy stance to be followed by the RBZ in the second half of 2022.
The current analysis focuses on the monetary policy stance for the next six months, which is anchored on interest rates, statutory reserves, Mosi-oa-Tunya gold coins and the foreign exchange auction.
Interest ratesThe policy rate is at 200% effective June 24 2022 while deposit interest rates on savings remain at 40% per annum.
In nominal terms, this translates to an interest rate spread of 160%.
Considering an inflation rate of 256,9% recorded at the end of July 2022, it means both banks and depositors continue to get negative returns.
Furthermore, economic agents lost confidence in the banking system since deposit interest rates on savings are around six-fold lower than the level of inflation. 🔗 Read Full Article
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