RBZ holds firm: Rates unchanged as inflation stays low

The Reserve Bank of Zimbabwe (RBZ) has maintained its tight monetary policy stance, keeping key rates unchanged as it seeks to anchor inflation expectations and sustain recent economic stability.

In resolutions from the Monetary Policy Committee (MPC) meeting held on March 24, 2026, the central bank said it was encouraged by continued disinflation, with annual inflation dropping to 4.1% in January and further to 3.85% in February—levels not seen in over three decades.

The committee expects inflation to remain below 5% in March, despite emerging pressures linked to global oil price increases driven by geopolitical tensions in the Middle East.

Zimbabwe's economy recorded growth of over 6.6% in 2025, with prospects for 2026 remaining positive despite a mid-season dry spell experienced in February.

Strong export performance, particularly from gold and platinum group metals, has boosted foreign currency inflows, which rose to US$3.35 billion in the first two months of 2026, up from US$1.89 billion during the same period last year. These inflows have supported exchange rate stability and strengthened backing for the local currency, ZiG.

The MPC also noted positive nationwide feedback on the upcoming rollout of the upgraded "BiG 5" ZiG banknotes, set for introduction on April 7, 2026, which are expected to improve transactional convenience and promote wider use of the domestic currency.

However, the committee flagged risks from rising fuel prices, warning that the oil price shock could trigger short-term increases in inflation through second-round effects, even though it remains largely a supply-side issue beyond direct monetary control.

Month-on-month inflation is projected to rise slightly between March and May before stabilising from June, with annual inflation expected to remain in single digits throughout 2026.

To contain inflationary pressures, the MPC resolved to maintain the policy interest rate at 35 percent while keeping statutory reserve requirements unchanged at 15 percent for savings and time deposits and 30 percent for demand and call deposits in both local and foreign currency.

The committee also addressed challenges in implementing a 90 percent export retention threshold for small-scale gold miners. Following concerns raised by the Zimbabwe Mining Federation and operational issues at Fidelity Gold Refinery, the policy has been temporarily suspended to allow for logistical adjustments.

RBZ Governor John Mushayavanhu said the central bank remains confident that strong foreign currency inflows and growing reserves will ensure adequate funding for critical imports, including fuel.

Looking ahead, the MPC said it will continue monitoring both global and domestic developments and stands ready to adjust policy if necessary to sustain low inflation and economic growth of above 5 percent, in line with the National Development Strategy 2.

The central bank emphasised its commitment to maintaining price and exchange rate stability as the country navigates evolving economic risks.