HARARE – The Reserve Bank of Zimbabwe (RBZ) has eased its monetary policy stance for the first time this year, cutting the Bank Policy Rate by five percentage points to 30%, citing subdued inflation, exchange rate stability and robust foreign currency inflows that have strengthened confidence in the economy.
The decision was announced following a meeting of the Monetary Policy Committee (MPC) on June 15, which reviewed domestic and global economic developments and concluded that prevailing macroeconomic conditions warranted a measured reduction in borrowing costs while maintaining overall monetary discipline.
The MPC also reduced the interest rate on the Targeted Finance Facility from 20% to 15%, a move expected to support productive sectors of the economy by lowering financing costs and encouraging investment.
In its Monetary Policy Statement, the committee said the decision was underpinned by continued price stability and improving external sector performance.
“The prevailing macroeconomic environment, characterised by low and stable inflation, exchange rate stability, improved foreign currency inflows and adequate reserve accumulation, provides scope for a calibrated easing of monetary policy while safeguarding macroeconomic stability,” the MPC said.
Annual inflation stood at 4.8% in May 2026, remaining below the central bank’s medium-term target threshold of 5%. Although higher than the negative inflation rate of 4.4% recorded in April, the MPC noted that inflationary pressures remained largely contained.
The central bank attributed the favourable inflation outlook to stable exchange rates, prudent liquidity management, improved availability of foreign currency and declining international oil prices, which have eased imported inflationary pressures.
The policy easing comes as Zimbabwe continues to record strong foreign currency earnings from exports, diaspora remittances and investments.
According to the RBZ, foreign currency inflows rose by 39.1% to US$8.3 billion during the first five months of 2026, compared to US$6 billion recorded during the same period last year.
The surge in foreign exchange receipts has significantly strengthened the country’s external position and contributed to the accumulation of reserves backing the Zimbabwe Gold (ZiG) currency.
The MPC revealed that reserves supporting the ZiG had surpassed US$1.5 billion, providing import cover equivalent to approximately one-and-a-half months and reinforcing confidence in the country’s latest currency regime.
“The sustained growth in foreign currency receipts and reserve accumulation has enhanced the resilience of the economy and strengthened the backing of the ZiG currency,” the committee noted.
The exchange rate has remained relatively stable since the beginning of the year, trading within a narrow band of between ZiG25 and ZiG27 to the United States dollar.
Economists view exchange rate stability as one of the most significant achievements of Zimbabwe’s current monetary framework, particularly given the country’s long history of currency volatility and inflationary shocks.
The MPC maintained its 2026 economic growth forecast at 5%, supported by strong mining output, improved agricultural production, infrastructure investments and continued expansion in manufacturing and services sectors.
Analysts say the reduction in interest rates could provide a welcome boost to business activity, particularly for productive sectors that have struggled with high financing costs under Zimbabwe’s tight monetary policy regime.
Lower borrowing costs are expected to improve access to capital for manufacturers, exporters, farmers and small-to-medium enterprises, potentially accelerating investment and job creation.
However, the central bank signalled that it remains committed to maintaining a cautious approach to liquidity management to prevent a resurgence of inflationary pressures.
As part of that strategy, the MPC left statutory reserve requirements unchanged at 30% for demand and call deposits and 15% for savings and time deposits, preserving an important liquidity-control mechanism within the banking sector.
The committee stressed that while conditions now permit a modest easing of monetary policy, vigilance remains necessary amid an uncertain global environment marked by geopolitical tensions, fluctuating commodity prices and evolving financial market conditions.
For businesses and investors, the latest policy adjustment signals growing confidence by monetary authorities that Zimbabwe’s inflation and exchange rate stabilisation efforts are gaining traction. The challenge going forward will be sustaining that stability while ensuring cheaper credit translates into increased productive investment, export growth and broader economic expansion.
With inflation remaining below target, reserves strengthening and foreign currency inflows reaching record levels, the RBZ appears increasingly focused on supporting economic growth without compromising the hard-won gains in macroeconomic stability achieved over the past year.
