Zimbabwe remains committed to curbing inflation, but plans to shift the focus of monetary policy to place more emphasis on managing the money supply, the central bank said.
Writing in a five-year strategy plan, the central bank characterised this as a shift “from a tight to prudent monetary policy thrust” and said policy decisions will be “calibrated to reflect emerging inflationary pressures and crystallisation of any inflation risks.”
It didn’t specify what this would mean for interest rates going forward, but noted that businesses had told it that local borrowing costs in the southern African nation “were viewed as potentially prohibitive.”
The central bank held interest rates at 35% last month to maintain downward pressure on inflation and support the ZiG. The gold-backed currency was launched in 2024 and is the country’s latest effort to stand up a viable local unit after previous attempts collapsed.
Zimbabwe’s inflation was 0.2% in December compared to the month before and slowed to 15% on an annual basis from 19% in November. The bank said it expects the trend to continue and that the rate will reach single digits during the course of 2026.
It also reiterated its goal of transitioning the Zimbabwean economy away from reliance on the US dollar, which continues to account for the bulk of transactions. The bank said the transition would largely be market driven, but it will concentrate on creating the pre-conditions for success.
Such conditions included “low inflation, adequate reserve buffers, safe and sound financial and payment systems, and efficient exchange rate system and congruence between monetary and fiscal policies,” the bank said.
Bloomberg
