The Reserve Bank of Zimbabwe (RBZ) has cut its benchmark bank policy rate from 35 percent to 30 percent following a sustained structural shift in inflation dynamics, with annual inflation remaining below 5 percent since January 2026.
Announcing the resolutions of the Monetary Policy Committee (MPC) meeting held yesterday, RBZ Governor Dr John Mushayavanhu said the decision was informed by continued stability in price developments and strengthening macroeconomic fundamentals.
“The MPC commended the Reserve Bank for continued implementation of prudent monetary policy that has culminated in the observed structural shift in inflation dynamics, from peak levels of 95.8 percent in July 2025 to sustained single-digit levels below 5 percent realised since January 2026, thereby anchoring adaptive inflation expectations,” Mushayavanhu said.
He said the economy had managed to absorb external shocks, particularly the recent global oil price increases, without triggering sustained domestic price instability.
“The well-anchored inflation expectations have, in turn, helped the country to weather the impact of the recent oil price shock as reflected by a moderate change in domestic prices relative to the magnitude of the shock,” he said.
The MPC noted that month-on-month inflation rose temporarily from 0.5 percent in March to 1.1 percent in April 2026 due to fuel price adjustments before easing back to 0.5 percent in May. Annual inflation stood at 4.8 percent in April and 4.4 percent in May.
Mushayavanhu said the moderation was supported by fiscal and private sector responses.
“Measures taken by Government to cut some fuel taxes and levies, as well as self-restraint actions by businesses on price adjustments through cost rationalisation, reduced profit margins, alongside the use of alternative energy sources, also helped contain inflationary pressures,” he said.
Despite global supply disruptions, the RBZ said the domestic economy is projected to grow by 5percent in 2026, supported by rising external inflows. Foreign currency receipts reached US$8.3 billion by May 31, 2026, up from US$6 billion in the same period in 2025.
“The sustained increase in foreign currency inflows supported the accumulation of foreign currency reserves backing ZiG to over US$1.5 billion as at May 2026, equivalent to 1.5 months of import cover,” Mushayavanhu said.
He added that exchange rate stability had been preserved, with the ZiG trading between ZiG25 and ZiG27 against the US dollar and subdued parallel market activity.
The MPC also reduced the targeted finance facility rate from 20 percent to 15 percent while maintaining statutory reserve requirements unchanged. However, Mushayavanhu stressed that the decision did not amount to monetary easing.
“The MPC underlined that its decision to reduce the Bank policy rate does not entail easing monetary policy at this stage, but a realignment of the Policy Rate to the structural shift in inflation dynamics,” he said.
The committee said it would continue monitoring economic developments and adjust policy as needed to sustain inflation stability and support growth.
