The Reserve Bank of Zimbabwe’s Monetary Policy Committee has reduced the Bank policy rate from 30% to 27.5% with immediate effect, citing continued stability in prices, the domestic currency and the exchange rate which has helped to firmly anchor inflation and exchange rate expectations.
In a press statement after its meeting held on 28 September 2026, the MPC said annual ZiG inflation declined to 2.9% in August 2026, its lowest level since 1980, before rising modestly to 3.7% in September 2026. The increase largely reflected the renewed rise in international oil prices, which exceeded US$100 per barrel on 9 September 2026 amid escalating conflict in the Middle East. Inflation expectations, however, remained well anchored with month-on-month inflation averaging 0.4% for the period January to September 2026, translating into an annual average inflation of 4%.
The Committee attributed the stable price conditions to prudent money supply management, with reserve money contained within targets agreed between the Reserve Bank and the International Monetary Fund under the ongoing 10-month Staff-Monitored Programme. Accordingly, annual inflation is expected to remain in single digits at below 7% by the end of 2026.
The MPC said it still expects the economy to achieve its initially anticipated growth of 5% in 2026, supported by strong performance in the mining and agriculture sectors, which have reinforced domestic economic resilience.
Reflecting robust economic activity, foreign currency inflows increased by 37.8% to US$14.3 billion in the period to August 2026 from US$10.3 billion during the corresponding period in 2025. The growth was driven by strong export earnings, particularly from mining and diaspora remittances. Export receipts more than offset increased imports arising from higher international oil prices. Preliminary estimates indicate that the current account recorded a surplus of US$1.1 billion in the first half of 2026, a substantial improvement from the US$248.2 million surplus in the same period in 2025. The surplus is projected to strengthen from US$2.1 billion in 2025 to US$3.5 billion in 2026.
The strong external position supported the accumulation of foreign currency reserves backing ZiG, which exceeded US$2 billion in September 2026, equivalent to about 2 months of import cover. Increased inflows have also enhanced availability of foreign currency in the interbank market, underpinning stability of the exchange rate within the ZiG25.27 per US$1 range in 2026.
The MPC commended the strong uptake of the ZiG-Denominated Term Deposit Facility during the second quarter of 2026, saying the facility has supported development of a short-term yield curve for local-currency instruments, essential for deepening money and capital markets, while providing positive returns on local-currency savings and enabling economic agents to preserve the value of their savings and incomes. It also noted the strong performance by Government and the Reserve Bank under the IMF SMP, with all Quantitative Targets and Structural Benchmarks fully met for the first and second reviews undertaken by the IMF.
The current stability in prices, currency and the external sector is seen as a critical anchor for Vision 2030 and the National Development Strategy 2 (NDS2). By sustaining single-digit inflation, building foreign reserves and ensuring exchange rate predictability, the monetary authorities are creating the macroeconomic foundation required to attract long-term investment, accelerate industrialisation, support private sector productivity and protect livelihoods — all central pillars of NDS2 in driving Zimbabwe towards an upper middle-income economy by 2030.
In view of the continued benign inflation environment and the need to support the economy’s strong growth prospects, the MPC resolved to reduce the Bank policy rate from 30% to 27.5%, representing a total of 7.5 percentage points reduction since June 2026; reduce the interest rate on the Targeted Finance Facility in line with the reduction in the Bank policy rate from 15% to 12.5%, while capping banks’ all-inclusive on-lending rate to the productive sectors at 22.5%; maintain the existing differentiated statutory reserve requirements at 30% for demand deposits and 15% for savings and time deposits; maintain minimum interest rates on savings and time deposits at their current levels; and continue issuing the ZiGDTDF to support further development of the yield curve for domestic local-currency instruments and promotion of domestic savings.
The MPC emphasised that the reduction in the Bank policy rate does not signal monetary easing, but a realignment of the policy rate to observed inflation dynamics, noting that it has embarked on a gradual path of monetary policy normalisation against the backdrop of entrenched macroeconomic stability and better-anchored inflation expectations. The pace of adjustment will remain dependent on prevailing monetary and financial conditions, taking into consideration uncertainties arising from climatic shocks and geopolitical tensions.
The Committee said it will continue to monitor emerging risks associated with heightened global tensions and the forecast El Niño conditions during the 2026/27 agricultural season, while seeking to balance risks to inflation and growth and ensuring that inflation expectations remain firmly anchored in the short to medium term.
