Staff Reporter
Treasury has expressed gratitude over the decline on month-on-month inflation an affirmative development which shows the positive impact of the recent policy measures.
In a statement yesterday, Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya announced that month-on-month inflation had fallen from 12.4 % in August 2022 to 3.4% in September 2022.
“The Monetary Policy Committee (MPC) is committed to ensuring that the current disinflation trend is sustained, in both the short and long-term, through the maintenance of the tight monetary policy stance which should be buttressed by continuous fiscal prudence and close monitoring of wage-push inflation. This position is consistent with contemporary regional and global trends where monetary policy has remained tight to control inflation which is driven by both endogenous and geo-political factors,” said Dr Mangudya.
Dr Mangudya further said that the MPC expressed satisfaction with the progress registered with regard to the convergence of the parallel market and willing-buyer willing-seller foreign exchange rates.
He stated that foreign exchange rate had declined from 140% in May 2022 to levels of between 5% and 15%.
“The foreign exchange rate premium has significantly declined from an elevated level of 140% in May 2022 to current levels of between 5% and 15%, which is consistent with the regional and international norms. This positive development on the exchange rate front is envisaged to go a long way in eliminating arbitrage opportunities which were fueling forward pricing models and hence fomenting adverse inflation and exchange rate expectations,” he said.
According to Dr Mangudya, the committee articulated confidence that the prevailing favorable external sector environment, as reflected by robust performance in foreign currency receipts, would provide further impetus to the achievements relating to the exchange rate and price stability.
The RBZ boss further affirmed that the committee noted with satisfaction the improved market confidence and uptake of gold coins as an alternative investment product to holding US dollar.
Meanwhile, in view of these positive developments, the MPC resolved to maintain the Bank policy rate and medium-term lending rate at current levels of 20% and 100% respectively until durable stability measured by a sustained decline in month-on-month inflation to desired levels of less than 5% is attained.
The recent monetary policy measures by the RBZ consists of increasing the bank policy rate from 80% to 200% per annum, increasing the Medium Term Accommodation interest rate from 50% to 100% per annum, introduction of Gold Coins as a store of value among other measures.
