Reserve Bank of Zimbabwe cuts policy rate to 30% while holding reserve requirements unchanged as inflation stays below 5%

The Reserve Bank of Zimbabwe’s Monetary Policy Committee reduced the Bank policy rate to 30% from 35% with immediate effect, citing a shift to a low and stable inflation environment and the need to support projected economic growth. It also cut the Targeted Finance Facility rate to 15% from 20% and kept statutory reserve requirements unchanged at 30% for demand deposits and 15% for savings and time deposits across both local and foreign currency deposits. The committee stressed that the rate cut is a realignment to lower inflation rather than a broader easing of monetary policy. The decision follows inflation remaining in single digits since January 2026, with annual inflation at 4.8% in April and 4.4% in May after a temporary month-on-month increase linked to higher fuel prices. The committee said foreign currency inflows reached USD 8.3 billion by 31 May 2026 versus USD 6 billion a year earlier, helping lift reserves backing ZiG to more than USD 1.5 billion, equivalent to 1.5 months of import cover, and supporting exchange rate stability in a ZiG25-27 per USD range. It also highlighted initial uptake in the ZiG Denominated Term Deposit Facility, with ZiG367.2 million placed in the 90-day bill and ZiG110 million in the 30-day instrument, as part of efforts to strengthen monetary policy transmission. The committee said it will calibrate monetary policy on a meeting-by-meeting basis in line with macroeconomic developments. It also urged adherence to the quantitative and structural benchmarks under the International Monetary Fund Staff Monitored Program and called for faster completion of the new electronic foreign exchange management trading system.