The Reserve Bank of Zimbabwe (RBZ) has reduced its benchmark policy rate from 35 percent to 30 percent, citing a sustained decline in inflation and improved macroeconomic stability, in a move aimed at supporting economic growth.
Governor John Mushayavanhu announced the decision following a meeting of the Monetary Policy Committee (MPC) this week, where members reviewed recent economic and financial developments and assessed prospects for the remainder of the year.
Mushayavanhu said inflation had undergone a significant structural shift, falling from a peak of 95.8perecent in July 2025 to below 5perecent since January this year. Annual inflation stood at 4.4 percent in May 2026, down from 4.8 percent in April.
“In view of the structural shift in inflation dynamics to a low and stable inflation environment, and the need to support the envisaged economic growth, the MPC resolved” to reduce the bank policy rate from 35 perecent to 30perecent, he said.
The central bank also reduced the interest rate on the Targeted Finance Facility (TFF) from 20perecent to 15 percent. However, lending by banks to productive sectors under the facility will remain capped at an all-inclusive interest rate of 25perecent.
Despite the rate cut, policymakers stressed that the move should not be interpreted as a loosening of monetary policy.
“The MPC underlined that its decision to reduce the Bank policy rate does not entail easing monetary policy at this stage, but a realignment of the Policy Rate to the structural shift in inflation dynamics.”
The governor credited prudent monetary policy, government measures to reduce fuel taxes and levies, and business efforts to contain costs for helping keep inflation in check despite recent global oil price shocks.
He also pointed to strong economic fundamentals, including foreign currency inflows of US$8.3 billion during the first five months of 2026, up 39.1 percent from the same period last year. Foreign currency reserves backing the Zimbabwe Gold (ZiG) currency have risen to more than US$1.5 billion, while the exchange rate has remained relatively stable at between ZiG25 and ZiG27 to the US dollar.
Zimbabwe’s economy is projected to grow by five percent in 2026. Mushayavanhu said it would continue reviewing monetary policy on a meeting-by-meeting basis while remaining alert to risks that could threaten inflation and growth objectives.