Zimbabwe’s central bank has maintained its benchmark interest rate at 35 percent, signalling continued caution as authorities prioritise price stability following a sharp slowdown in inflation.
Governor John Mushayavanhu announced the decision on Friday during a monetary policy outlook briefing, stating that maintaining tight monetary conditions remains necessary to firmly anchor inflation expectations.
“We need to make sure inflation is anchored first, therefore the policy rate will remain at 35 percent,” Mushayavanhu said.
The decision by the Reserve Bank of Zimbabwe reflects policymakers’ efforts to consolidate recent gains after years of economic volatility marked by currency instability and rapid price increases.
Zimbabwe’s annual inflation rate has eased significantly in recent months, falling to 3.8 percent year-on-year in February when measured in local currency terms. The decline represents a major improvement compared with historically high inflation levels that have periodically undermined household purchasing power and business confidence.
Central bank officials say maintaining a relatively high interest rate is aimed at preventing renewed inflationary pressures while supporting exchange rate stability and strengthening confidence in the domestic currency.
High policy rates typically discourage excessive borrowing and money supply growth, helping to limit demand-driven price increases. Authorities believe sustaining tight monetary policy is critical to ensuring that recent disinflation trends become durable rather than temporary.
Zimbabwe has implemented a series of monetary reforms over the past year designed to stabilise the financial system, including measures to control liquidity growth and improve foreign exchange market functioning.
Economists note that while inflation moderation provides room for potential policy easing in the future, the central bank appears determined to avoid premature rate cuts that could reverse progress made in stabilising prices.
The Southern African economy remains vulnerable to external shocks, exchange rate fluctuations and fiscal pressures, all of which have historically contributed to inflation volatility.
Businesses have welcomed improving price stability, which helps planning and investment decisions, although elevated borrowing costs continue to constrain access to credit for companies and households.
Analysts say the central bank faces a delicate balancing act between sustaining disinflation and supporting economic growth. While high interest rates help stabilise prices, they can also slow investment activity and consumer spending if maintained for extended periods.
For now, policymakers appear focused on consolidating macroeconomic stability before considering any shift toward accommodative monetary policy.
Market observers expect future rate decisions to depend largely on inflation trends, exchange rate performance and fiscal discipline in the months ahead.
The central bank’s latest move signals a continued commitment to restoring economic confidence and preventing a resurgence of inflation, as Zimbabwe seeks to maintain stability after a prolonged period of economic uncertainty.
