- Decision
- Lower
- Rate change
- 500 bps
- policy rate
- 30%
The Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) cut the Bank Policy Rate by 500 basis points to 30% with immediate effect, saying a structural shift to low and stable inflation justified a realignment of the policy rate while supporting growth, and it stressed that the move did not amount to monetary easing. The cut followed holds at 35% in March 2026, December 2025, September 2025 and June 2025. The MPC also reduced the Targeted Finance Facility (TFF) rate to 15% from 20%, capped banks’ all-inclusive on-lending to productive sectors at 25%, and kept statutory reserve requirements unchanged at 30% for demand deposits and 15% for savings and time deposits in both local and foreign currency. Annual inflation stood at 4.4% in May 2026 after a temporary rise in month-on-month inflation in April linked to the fuel price shock, and the economy is expected to grow 5% in 2026 from a revised 8.2% in 2025, while the MPC also welcomed initial uptake of the ZiG Denominated Term Deposit Facility (ZiGDTDF) as a step to strengthen transmission and guide minimum savings rates. Strong foreign currency inflows supported reserves backing ZiG to over USD1.5 billion by May 2026 and helped keep the ZiG/USD exchange rate stable at ZiG25-27/USD, with subdued parallel market activity. The MPC said the recent oil price shock was felt mainly through fuel prices with limited second-round effects, and that lower Brent crude prices following the US-Iran peace deal should support the declining price trend. It said policy will continue to be calibrated on a meeting-by-meeting basis in line with macroeconomic fundamentals, while remaining ready to act if risks emerge.
Rate evolution
The Reserve Bank of Zimbabwe held the Bank policy rate at 35% from June 2025 through March 2026 before cutting it by 500 basis points to 30% in June 2026, leaving the rate 500 basis points lower over the period. The prolonged hold sought to entrench price and exchange rate stability, anchor inflation expectations and allow tight monetary conditions to transmit, as monthly inflation remained low, annual inflation fell into single digits, foreign currency inflows and reserves strengthened, and growth stayed robust despite uncertainty over global growth, trade tensions and geopolitical conflict. By March 2026, risk framing had shifted toward the oil-price shock and possible second-round effects on expectations, prompting continued restraint even though the Reserve Bank viewed the shock as supply-side and expected inflation to remain in single digits. In June, after inflation stayed below 5%, oil-price pass-through proved limited, expectations remained anchored, reserves rose and the exchange rate remained stable, the Committee cut the rate to support 5% projected growth but called the move a realignment rather than easing, while signalling meeting-by-meeting calibration and vigilance toward emerging risks.