RBZ monetary policy committee optimistic on inflation rate decline

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By Alois Vinga

THE Reserve Bank of Zimbabwe (RBZ) Monetary Policy Committee (MPC) has expressed optimism that inflation rate which recorded a decline last month, will sustain the trend going into the future.

The remarks come shortly after the Zimbabwe National Statistics Agency (ZIMSTAT) reported that yearly inflation has risen to 256,9% while monthly inflation recorded a slight decline as of July 2022.

Presenting resolutions of the MPC meeting held last Friday, RBZ governor, John Mangudya said the observation was noted as one of the key milestones of the recent monetary policy measures on the economy.

“With month-on-month inflation having declined from 30,7% in June 2022 to 25,6% in July 2022, the MPC noted that the progressive decline will continue in the outlook period as a result of the tight monetary policy stance being pursued by the RBZ,” he said.

The central bank governor said the MPC also noted that the disinflation trend will be reinforced by measures the government is taking to deal with factors that destabilise the foreign exchange market, particularly by reviewing the basis and framework for payments to its suppliers of goods and services in its quest to stabilise the foreign exchange market.

“The MPC further noted that whilst monthly inflation is expected to continue to decelerate during the outlook period, annual inflation will continue to increase up to September 2022 as a result of the lower base effect in 2021.

“In view of the said developments and outlook, the MPC resolved to maintain the interest rates at current levels,” said Mangudya.

He said the tight monetary policy stance would be buttressed by the favourable uptake of gold coins which were introduced in the economy on 25 July 2022 as an alternative stable financial product for store of value.

“A total of 1500 gold coins were sold by the Bank’s agents during the first week of their release into the market, with 85% having been bought in local currency and the balance of 15% in foreign currency.

“An additional 2000 gold coins will be released into the market during the week commencing 1 August 2022. The MPC will continue to review interest rates on a regular basis in line with month– on-month inflation developments,” said Mangudya.