The Reserve Bank of Zimbabwe has maintained its benchmark policy rate at 35 percent while abandoning the fixed 2030 deadline to end the country’s multi-currency system and unveiling new ZiG banknotes.
The move signals a continued “stability-first” approach, prioritising inflation control and currency stability over short-term growth.
RBZ Governor said the transition to a single currency will be guided by economic fundamentals, including sustained low inflation, foreign reserves covering three to five months of imports, a fully functioning forex market, and durable demand for the ZiG. US dollar-denominated contracts and foreign currency accounts will continue to be honoured, aiming to preserve depositor confidence and contractual certainty.
At 35 percent, Zimbabwe’s policy rate is among the highest in Africa. Economists describe it as a defensive tool to absorb excess liquidity, curb speculative demand for foreign currency, and anchor inflation expectations.
“In my view, the RBZ’s decision reflects a stability-first stance,” said economist Tinotenda Bunhu. “The primary goal is to protect the currency and prevent a relapse into high inflation.”
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However, the rate sharply increases borrowing costs, discouraging household credit and prompting SMEs to postpone expansion. While it helps moderate inflation and exchange-rate volatility, prolonged tightness risks slowing capital formation, job creation, and private sector growth.
Tinashe Nyangaire, founder of African Vendor Network, echoed these concerns, warning that persistent high rates may suppress private investment, push firms toward self-financing, and deepen informalisation. “High rates risk financial disintermediation and reduced formal-sector engagement,” he said.
The RBZ also announced new ZiG “Big Five” banknotes starting April 7, alongside coins to address small-denomination shortages. Authorities insist the rollout will not expand money supply but convert electronic balances into physical cash. Additional measures include caps on withdrawal and POS fees, free balance inquiries and deposits, and mobile operator audits to curb fraud.
Foreign reserves currently stand at US$1.3 billion, including 4.2 tonnes of gold and nearly half a billion in cash, a buffer RBZ hopes to strengthen before considering monetary easing.
For investors, the 35 percent rate signals institutional resolve and commitment to macroeconomic stability but underscores high short-term borrowing costs and persistent risk. As Bunhu notes, confidence will depend less on the nominal rate and more on policy consistency, fiscal discipline, exchange-rate transparency, and structural reforms.
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