New Monetary Policy Committee Announced Amid Series of Missed Targets

  • Overnight lending rate increased to 40% as RBZ target below 10% annual inflation
  • Missed 2019 and 2020 year-end inflation targets

HARARE – Minister of Finance and Economic Development, Professor Mthuli Ncube on Saturday 20th February, announced the appointment of new members to the Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe.

The appointment followed a notice on Friday in which the central bank announced that its MPC which consisted of members including the outspoken Eddie Cross, had been dissolved with effect from January 31, 2021, citing a conflict of interest as a number of members are now serving new appointments within the wider economic landscape. Cross in his own capacity announced that he had quit the MPC as controversy haunts the apex bank amid a bleeding economy.

This development was announced a day after RBZ Governor Dr. John Mangudya released his 2021 Monetary Policy Statement titled “Staying on course in fostering price and financial system stability.”

The hawkish tone in the statement that accompanied the decision to increase the overnight lending rate from 35% to 40% per annum, and including a commitment to bring inflation down to the below 10% target year-on-year, shapes the task at hand as the new MPC members come into the spotlight. But as history has shown, this is going to be a tough task.

In essence, the MPC’s main function is to set the central bank’s benchmark lending rate.

The new members are Professor Albert Makochekanwa a senior lecturer at the University of Zimbabwe and hold a PhD in Economics, Persistence Gwanyanya an economist and is the founder of Bullion Group, Dr. Daniel Makina who is also an economist and teaches at UNISA, Dr. Charity Jinya a banker, and Mrs. Mathilda Dzumbunu identified among RBZ’s corporate governance members.

“I would like to congratulate the new members who I am confident will further strengthen the RBZ Monetary Policy Committee, said Minister Ncube adding that “The appointments are with immediate effect and I wish them all a successful tenure.”

The government has in recent years been missing set inflation and GDP targets among other key economic indicators as the country grapple through one of its worst economic demises since attaining independence in 1980.

For 2019, the government was targeting end-of-year monthly inflation of 10% which was missed by a considerable margin settling at 16.55%.

Meanwhile, year-end annual inflation for 2020 came in at 348.59%, way above the target of 300%.

It will take more than economic rhetoric born of political affiliations to achieve the set targets. The central bank, and indeed the MPC has a mammoth task ahead as the country is treading on the edge of economic collapse coupled with rapid currency depreciation.

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