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RBZ tightens monetary policy to stem inflationary pressures
07 Feb 2022 at 21:18hrs | Views
THE Reserve Bank of Zimbabwe (RBZ) has tightened its monetary policy framework to stem resurgent inflationary pressures while promoting increased usage of the local dollar.
The key measures include a downward review of the quarterly reserve money targets, inflation targeting, tight interest rate policy, tightening of exchange rate controls and refinement of the auction system, and a review of export retention provisions, among others.
The interventions are in response to rampant parallel market exchange benchmarking or indexation of prices and services, which continue to weigh heavily on the progress being made to transform the country's economy.
These have an effect of weakening domestic and international competitiveness, Finance and Economic Development Minister, Professor Mthuli Ncube, said on Friday.
In his Monetary Policy Statement for 2022 issued today, RBZ Governor Dr John Mangudya, stressed the need to tackle market indiscipline and restore stability in the financial sector.
"The Bank's focus to further tighten monetary policy is necessary to stem inflationary pressures and anchor inflation and exchange rate expectations within the national economy," said Dr Mangudya.
"Controlling inflation is essential to preserve the value of the local currency and to minimise the appetite for quick conversion of the local currency into foreign currency - behaviour caused by past experiences.
"The Bank strongly believes that attaining exchange rate and price stability is achievable under the current monetary policy stance which is supported by a complementary fiscal policy.
"Further decline in inflation will go a long way in preserving the value of local currency as well as increasing the demand for local currency and minimising appetite for quick conversion of local currency into foreign currency."
Dr Mangudya assured the nation that the Apex Bank and Treasury through the Liquidity Management Committee will ensure that the twin policy objectives of stability and growth are met as he urged stakeholders to play their part.
"The effectiveness and predictability of monetary policy requires the support of consumers and business," he said.
"This is critical for the common good of the economy in pursuing common objectives which are fundamental for unity of purpose."
The key measures include a downward review of the quarterly reserve money targets, inflation targeting, tight interest rate policy, tightening of exchange rate controls and refinement of the auction system, and a review of export retention provisions, among others.
The interventions are in response to rampant parallel market exchange benchmarking or indexation of prices and services, which continue to weigh heavily on the progress being made to transform the country's economy.
These have an effect of weakening domestic and international competitiveness, Finance and Economic Development Minister, Professor Mthuli Ncube, said on Friday.
In his Monetary Policy Statement for 2022 issued today, RBZ Governor Dr John Mangudya, stressed the need to tackle market indiscipline and restore stability in the financial sector.
"The Bank's focus to further tighten monetary policy is necessary to stem inflationary pressures and anchor inflation and exchange rate expectations within the national economy," said Dr Mangudya.
"Controlling inflation is essential to preserve the value of the local currency and to minimise the appetite for quick conversion of the local currency into foreign currency - behaviour caused by past experiences.
"The Bank strongly believes that attaining exchange rate and price stability is achievable under the current monetary policy stance which is supported by a complementary fiscal policy.
"Further decline in inflation will go a long way in preserving the value of local currency as well as increasing the demand for local currency and minimising appetite for quick conversion of local currency into foreign currency."
Dr Mangudya assured the nation that the Apex Bank and Treasury through the Liquidity Management Committee will ensure that the twin policy objectives of stability and growth are met as he urged stakeholders to play their part.
"The effectiveness and predictability of monetary policy requires the support of consumers and business," he said.
"This is critical for the common good of the economy in pursuing common objectives which are fundamental for unity of purpose."
Source - The Chronicle
