By Alois Vinga
THE RESERVE Bank of Zimbabwe (RBZ) Monetary Policy Committee (MPC) has maintained the bank policy rate at 60% amid other measures aimed at reinforcing macroeconomic stability.
In a statement released after the MPC meeting Wednesday, RBZ governor John Mangudya defended the decision to maintain the interest rate.
“In light of obtaining macroeconomic stability, the committee resolved to maintain the existing monetary policy stance as follows: maintaining the bank policy rate at 60% and the Medium Term Bank Accommodation (MBA) facility interest rate at 40%,” he said.
The measure to maintain the high-interest rate is aimed at curbing speculative borrowing, which has fueled a decline in the value of the Zimbabwe dollar after the RBZ last hiked its key interest rate in February.
The statutory requirements for demand call deposits were set at 10% and at 2,5% for savings and time deposits.
Among other measures, the committee agreed to maintain reserve money growth targets at 10% for the fourth quarter of 2021 and the first and second quarters of 2022.
“The committee affirmed its commitment to continue refining the Bank’s open market operations (OMO) instruments to support optimal liquidity management. In view of the significant increase in total bank deposits during the past year,” Mangudya said.
The committee also resolved to monitor developments on broad money to minimise its possible destabilising effects on inflation and the exchange rate and expressed satisfaction with the progress made by the RBZ in clearing the ring-fenced auction backlog allotments.
“It resolved that, in view of the forthcoming festive season, the last auction for 2021 will be on 14 December 2021 and the first auction for 2022 will be on 11 January 2021, “ the RBZ governor said.
Meanwhile, a trading update released at the close of the auction system Tuesday saw 320 bids being disqualified on both auctions.
On the Main Auction platform, a total of 404 bids was accepted with raw materials being allotted US$14 million, machinery and equipment US$10,5 million, consumables US$3 million, services US$1,9 million, retail and distribution US$2,8 million pharmaceuticals and chemicals US$1,4 million, paper and packaging US$672 550.
In the Small to Medium Enterprises auction a total of 560 bids were accepted with priority going towards machinery and equipment earning US$2,2 million, consumables US$637 511, and services US$497 741 among other allotments.
The average rate closed the business day at $108,66 against US$1.