THE Reserve Bank of Zimbabwe (RBZ) has kept all key policy rates unchanged, with the bank’s Monetary Policy Committee (MPC) seeking to consolidate significant gains achieved on inflation, domestic currency stability and discipline in the foreign exchange market.

Announcing the resolutions of the MPC meeting held on December 1, RBZ Governor Dr John Mushayavanhu said the committee agreed to maintain the current tight monetary policy stance to preserve the progress made since late 2024.

Official statistics show that monthly ZiG inflation averaged 0,5 percent from February to September 2025. Notably, month-on-month ZiG inflation has remained largely anchored below one percent, declining from 0,4 percent in August to minus 0,25 percent in September. The annual ZiG inflation rate dropped sharply from 82,7 percent in September to 19 percent in November — a trend Dr Mushayavanhu attributed to strict monetary discipline since September 2024.

“The MPC has resolved to ‘stay the course’ of the current monetary policy stance,” he said, adding that the central bank will maintain the bank policy rate at 35 percent and keep statutory reserve requirements at 15 percent for savings and time deposits, and 30 percent for demand and call deposits across all currencies.

Bank policy rates and statutory reserve thresholds are crucial tools used by central banks to manage liquidity in the financial system and control inflation by influencing money supply, borrowing costs and overall economic activity.

Inflation developments were central to the MPC’s decision, with the committee noting the significant slowdown in annual ZiG inflation from 82,7 percent in September to 19 percent in November. Dr Mushayavanhu said the disinflation trend was a direct result of disciplined monetary management maintained since September 2024.

“The MPC welcomed the positive developments on the inflation front. Annual inflation is expected to continue declining further, ending the year 2025 at between 15 and 17 percent,” he said.

The governor added that, for the first time in over two decades, local currency inflation is projected to reach single-digit levels in the first quarter of 2026.

Analysts say this sets the stage for key policy rate normalisation in 2026, but the bank insists that stability must first be fully entrenched before easing. Economist Mr Tinevimbo Shava said the MPC’s decision to keep rates unchanged was expected and sensible, given the central bank’s priority to consolidate the current disinflation momentum.

“This is the clearest signal yet that the RBZ wants to avoid any premature loosening. With annual inflation now at 19 percent and projected to enter single-digit levels early next year, maintaining a tight stance is necessary to protect the gains already made,” he said.

Banker Mr Raymond Madziva said that while policy stability was essential, the prolonged maintenance of high interest rates continued to weigh on credit expansion and private sector borrowing.

“Keeping the policy rate at 35 percent ensures inflation remains contained, but it also means credit remains expensive for businesses trying to expand,” he said.

“There is a delicate balance between defending the currency and supporting productive lending.”
According to the governor, maintaining positive real interest rates remains vital to boosting demand for the ZiG, protecting the value of savings and discouraging speculative borrowing.

On the fiscal side, the MPC welcomed the Government’s decision to reduce the Intermediated Money Transfer Tax (IMTT) on ZiG transactions from two percent to 1,5 percent. Dr Mushayavanhu described the measure as supportive of efforts to strengthen domestic currency usage.

“This measure is critical to complement monetary policy measures aimed at promoting the wider use of the domestic currency and financial inclusion,” he said.

He noted that a more attractive transactional environment for ZiG payments is essential as Zimbabwe moves toward the long-term goal of transitioning to a mono-currency by 2030.

Commenting on fiscal adjustments, Mr Madziva said the IMTT reduction was positive but still not sufficient to unlock the full potential of digital payments.

“A further gradual reduction in 2026 would help promote formalisation and increase transaction volumes.”
The governor emphasised that sustained foreign currency inflows — now above US$13 billion for the 10 months to October — have strengthened reserves and lifted confidence in the Willing-Buyer Willing-Seller market. Reserves now stand at around US$1 billion, equivalent to more than 1,2 months of import cover.

Dr Mushayavanhu said the MPC’s strategy is aligned with the newly launched National Development Strategy 2 (2026–2030), which places macroeconomic stability and financial sector deepening at the centre of its economic transformation ambitions.

“The aforestated positive monetary and financial developments show that the country is making bold strides towards meeting the Conditions Precedent for transitioning to a mono-currency by 2030,” he said.

Mr Shava added that alignment with NDS2 is important for medium-term currency reform ambitions.

“Mono-currency transition requires credibility, predictability and policy consistency. The MPC is clearly trying to build that foundation.”

The governor added that durable price and exchange rate stability will create an enabling environment for private sector-led investment and growth. The economy is projected to grow by 6,6 percent in 2025, supported largely by strong mining and agriculture performance.

Beyond the rate decision, the MPC highlighted the continued smooth functioning of the foreign exchange market, noting that all bona fide import and foreign payment requirements were being met through the WBWS system. The governor said the central bank’s strict adherence to a data-driven and well-calibrated monetary policy framework will remain in place to protect stability and build resilience.

“Once a low and stable inflationary environment is entrenched, interest rates will gradually be normalised to support private sector credit and investment,” he said.

In the meantime, the message from the country’s monetary authorities is clear: stability first, consolidation next and cautious easing later. The RBZ believes this disciplined approach will give the ZiG more durability, deepen confidence in the economy and support NDS2’s ambition of achieving upper-middle-income status by 2030. – Herald