The Reserve Bank of Zimbabwe’s Monetary Policy Committee has expressed satisfaction with the decline in the foreign exchange rate premium from 140% in May 2022 to between 5% and 15%, which, it says, is consistent with regional and international norms.
In its monetary policy statement released today after its meeting on Friday, the MPC said this positive development on the exchange rate front will go a long way in eliminating arbitrage opportunities which were fuelling forward pricing models and hence fomenting adverse inflation and exchange rate expectations.
Annual inflation declined from 285.1% in August to 280.4% this month while month-on-month inflation plunged from 12.4% in August to 3.47% this month.
“Going forward, the MPC expects that a combination of the current tight monetary policy, continued use of gold coins, foreign exchange auction system, insistence of value for money by Government in its procurement processes and practices, close monitoring of possible occurrence of wage-push inflation and effective monitoring and enforcement by the Financial Intelligence Unit will sustainably anchor exchange rate expectations, thus limiting the exchange rate pass-through to inflation,” the statement said.
Full statement:
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