ZNCC urges RBZ to cut policy rate to 20%

The Zimbabwe National Chamber of Commerce (ZNCC) has urged the Reserve Bank of Zimbabwe (RBZ) to lower its bank policy rate from the current 35% to 20% in an effort to ease growing credit constraints in the market and stimulate production in a liquidity-starved economy.

The recommendation, contained in the ZNCC's latest report presented at its annual congress in Victoria Falls, comes amid tightening monetary and fiscal policies aimed at reinforcing confidence in the newly introduced Zimbabwe Gold (ZiG) currency. However, the business chamber warns that these hawkish measures have exacerbated the ongoing liquidity crunch, threatening to stifle productivity and worsen the country's economic challenges.

The RBZ hiked the policy rate from 20% to 35% earlier this year to curb speculative borrowing, a move that has since drawn concern from both industry and financial experts.

"The central bank should consider reducing the bank policy rate from 35% to approximately 20%," ZNCC said. "This adjustment would help alleviate credit constraints on productive sectors while still maintaining a real positive interest rate."

In addition to recommending a rate cut, the Chamber called on the RBZ to reconsider recent increases in statutory reserve requirements, warning that they may further strain liquidity in both the local and foreign currency markets. The RBZ had raised statutory reserve requirements by 15 percentage points for local currency and 10 percentage points for foreign currency deposits.

Currently, reserve requirements for savings and time deposits stand at 15% for both currencies, while demand and call deposits are pegged at a steep 30%.

"These requirements may exacerbate the liquidity strain," ZNCC said. "The authorities should re-evaluate these levels to balance liquidity provision with financial stability."

While acknowledging that the 2025 Monetary Policy Statement outlines key commitments - including price stability, exchange rate management, and efforts to build foreign exchange reserves - ZNCC noted that the real challenge lies in execution. The Chamber warned that weak market confidence and poor coordination with fiscal authorities could undermine the central bank's efforts to stabilise the economy.

"While the policy intentions are sound, their success will depend on practical implementation, market response, and alignment with fiscal strategy," the report noted.

Concerns about the sustainability of the ZiG currency and the general macroeconomic environment also loom large, particularly as inflationary pressures remain and access to affordable credit continues to dwindle.

Adding his voice at the congress, banker and financial analyst Tawanda Nyambirai criticised Zimbabwe's high reserve requirements, saying they were out of sync with regional standards. He compared Zimbabwe's 30% reserve ratio with South Africa's 2.5%, saying the disparity significantly raises the cost of money in Zimbabwe.

"When you calculate the cost, if you lend money, you have to take into account the amount of money that is housed and is gathered and collected in Zimbabwe," said Nyambirai. "Under such conditions, local banks cannot operate competitively."

The ZNCC's recommendations underscore growing pressure on the RBZ to recalibrate its monetary policy framework to boost credit flows, restore market confidence, and revive economic activity amid widespread liquidity shortages. As the ZiG currency continues to define Zimbabwe's new monetary era, how the central bank responds to these challenges could determine the broader economic trajectory in the months ahead.