The Reserve Bank of Zimbabwe has considerably reduced the overnight bank rate in a bid to jumpstart the economy that has been grounded for the past two decades.
The development marks a clear departure from the previous government policy which saw rates being raised in September.
RBZ Governor Dr John Mangudya said the Monetary Policy Committee (MPC) resolved this Monday to reduce the rates saying that it felt the was now a positive outlook on inflation. Mangudya said:
To this end, the bank rate, currently at 70 percent, requires review; notwithstanding a recent spike in monthly inflation to 38,8 percent due to shocks caused mainly by adjustments of electricity and fuel prices, the inflation outlook is positive.
Consequently, the committee resolved to revise the bank policy rate from 70 to 35 percent with effect from November 20, 2019. This position will be reviewed at future meetings.
Meanwhile, month-on-month inflation rose to 38.75% in October from 17.7% the previous month, mainly because of the increase in the prices of basic commodities.
Presenting his 2020 Budget Statement before Parliament last week, Finance Minister, Mthuli Ncube projected that the inflation will fall to a single digit in the first quarter of 2020, a target economic analysts say the government will miss.
More: The Herald