The Monetary Policy Committee (the MPC) of the Reserve Bank of Zimbabwe (the Bank) met on 23 October 2023 and deliberated on recent macroeconomic and financial developments in the economy.
The MPC was pleased with the relative exchange rate and price stability obtaining in the economy since June 2023. The MPC noted, with emphasis, the need to ensure that inflation expectations continued to be firmly anchored through urgent attention to any emerging risks. The MPC also noted that there was need to continue promoting solutions that were aligned with the digital space and plastic money environment that the country found itself in and, in that regard, the MPC applauded the Bank for continuing to engender financial inclusion in a market-based and cash-lite driven economy.
The MPC noted that the negative impact of emerging global risks, including subdued global growth emanating from geo-economic fragmentation and the effects of tight monetary policy, high interest rates, credit squeeze and low international commodity prices, could pose significant risks to the current stability in the domestic economy. Global growth was expected to slow down from 3.5% in 2022 to 3.0% in 2023 and to 2.9% in 2024, which is far below the historical average of 3.8%.
Due to the negative developments in the global economy, prices for most mineral commodities including platinum, nickel and lithium have been declining, negatively affecting export receipts in the economy. As a result, export receipts, which are the main source of foreign currency for both the wholesale and retail foreign exchange auctions and for servicing the country’s foreign commitments, fell by 9% over the nine months to September 2023, from US$4.5 billion during the comparable period in 2022 to US$3.6 billion.
Considering the emerging global risks and the need to keep exchange rate and inflation expectations anchored to support economic growth, the MPC made the following resolutions: