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RBZ says too early to soften tight monetary policy

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By Alois Vinga


THE Reserve Bank of Zimbabwe (RBZ) has revealed that tight monetary policy stance will remain in place for now, dousing hopes of an imminent climb down of the measures by some economic players.

Since the latter part of the year’s first half, the RBZ moved to hike interest rates by up to 200% on the back of strict excess liquidity mop up in the economy which has been further buttressed by close surveillance on the payment of suppliers by government among other measures.

In turn, the measures have been widely hailed for stabilising inflation in a development which has seen both annual and monthly inflation rates recording a downward trajectory in the recent months.

Notwithstanding the positives, a section of industrialists are clamouring for the review of the tight monetary policy measures, arguing that it is limiting their access to working capital and thereby choking productivity.

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Addressing delegates at the Chamber of Mines of Zimbabwe this week, RBZ Governor John Mangudya hinted that despite the validity of such arguments, broader economic interests continue to be tilted in favour of maintaining the current policy regime.

“We are also putting in place the supportive infrastructure to ensure that the economy remains stable. We are going to continue with the tight monetary policy stance to ensure that the value of our local currency makes it a favourable option in transactions.

“It’s too premature for us to soften the policy because we do believe that this economy is sentiment and perception driven. So we are going to continue with a tight monetary policy stance. The government is going to continue with the Value for Money in Procurement so that there is no excess money going into the economy.

“Stabilised exchange rates and inflation. Once we have a stable inflation environment so that at the end of the day we are able to transcend towards sustainable inflation levels,” he said.

The central bank governor committed to keeping on working hand in glove with various stakeholders in exploring ways to widen access to foreign currency for companies.