RBZ MPC further reduces interest rates, introduces digital gold coins

Spread This News

By Alois Vinga

THE Reserve Bank Zimbabwe (RBZ) Monetary Policy Committee (MPC) has further reduced interest rates in line with current inflation, while introducing digital gold coins to further widen the instrument’s tradability.

Inflationary trends show that annual inflation declined from 101, 5% in January 2023 to 92,3% in February 2023 and further  down to 87,6% in March 2023 amid expectations that it will continue on that disinflation path.

Month on month inflation declined from 0,7% in January 2023 to -1,6% in February 2023 and 0,1% in March 2023.

In an update soon after the MPC meeting Friday, RBZ governor, John Mangudya underscored that after drawing guidance from the objective to continue anchoring exchange rate and inflation expectations in the economy, the MPC resolved to stay in course of a tight Monetary Policy Stance (MPS) while aligning the interest rates to realistic inflation rates.

“With effect from 1 April 2023, the MPC reduced the bank Policy Rate from 150% to 140% per annum. The Medium Term Bank Accommodation Facility for the productive sectors, including individuals and MSMEs was also reduced from 75% to 70% per annum.

“The MPC moved to maintain the prevailing Bank policy rate as the minimum lending rate for all banks. Statutory reserves requirements were maintained at 10% for demand and call deposits and 5% for time and savings deposits for both domestic and foreign currency deposits,” he said.

Deposit rates on savings and time deposits were maintained at the minimum of 30% and 50% per annum respectively while the Willing Seller Willing Buyer (WBWS) market was further liberalised by increasing and standardizing the trading margins for authorized dealers  from the current 5% to 10% consistent with the margin applicable bureau de change retailers and maintaining the maximum amount per transaction at US$100 000.

To expand the value preserving instruments and enhance divisibility and widen their access to the public, the MPC resolved to complement the current issuance of physical gold coins with backed digital products.

“This initiative will allow gold coins to be widely traded and in the process expand tradable assets in the economy  for store of value purposes and will  be over and above the procurement, by the Bank of smaller US$ denominations for divisibility purposes and /change for transactions in the economy,” said Mangudya.

He added that the MPC affirmed its commitment to stay the course of the tight monetary policy stance and to cautiously adjust the policy rates in line with positive developments in the economy.