- The Reserve Bank of Zimbabwe (RBZ) has chosen to keep interest rates unchanged during its recent monetary policy committee meeting
- This decision coincides with the introduction of the ZiG banknotes into the market today
- The RBZ's decision to maintain interest rates aims to provide stability and support the smooth transition of the new ZiG currency
Harare- The Reserve Bank of Zimbabwe (RBZ) has maintained the interest rates at 20% during its most recent monetary policy committee meeting, which took place yesterday. This meeting was significant as it was the first one held since the introduction of the ZiG banknotes on April 5th, which are set to enter the market today.
In addition to keeping the benchmark interest rates unchanged, the RBZ established an interest rate corridor ranging from 11% to 25%.
The statutory reserve requirements for demand deposits, savings, and time deposits in the ZiG currency were set at 15% and 5% respectively.
The RBZ also maintained the statutory reserve requirements for demand deposits and savings, as well as time deposits in foreign currency, at 20% and 5% respectively.
By implementing these measures, the RBZ aims to support a tight monetary policy. The bank has committed to managing the growth of money supply in order to achieve desired levels determined by targeted inflation, economic growth, and an increase in foreign reserves supporting the ZiG currency.
"To support the tight monetary policy, the Bank will work closely with the government to promote the expanded use of ZiG for the payment of goods and services to public entities, including the settlement of tax obligations on Quarterly Payment Dates (QPDs)," stated the RBZ in an official announcement.
The impact of these decisions is that the RBZ aims to maintain a stable interest rate environment, which can influence borrowing costs, investment decisions, and overall economic activity. By setting an interest rate corridor, the RBZ provides banks with a range within which they can lend and borrow funds, promoting liquidity management and stability in the financial system.
The statutory reserve requirements help regulate the amount of funds banks must hold in reserve, which affects their lending capacity and the overall money supply in the economy.
The RBZ's commitment to managing money supply growth supports the goal of controlling inflation and maintaining a stable currency.
Encouraging the use of the ZiG currency for transactions with public entities can help promote its acceptance and usage in the economy, potentially enhancing its value and stability.
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