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*RBZ Reduces Interest Rate, Reviews Foreign Currency Retention Policy* *Follow Pindula on WhatsApp for daily new updates* https://whatsapp.com/channel/0029Va84dngJP21B2nWeyM3v?sl The Reserve Bank of Zimbabwe (RBZ) has made several decisions during a Monetary Policy Committee (MPC) meeting. They reduced the Bank Policy (interest) rate from 150% to 130% per year. The committee noted the need to maintain stable inflation expectations and promote digital and cashless transactions. They acknowledged global risks and declining export receipts due to falling commodity prices. In response, they standardised foreign currency retentions at 75% for all sectors and removed special dispensations. Financial institutions were encouraged to offer low-cost bank accounts to enhance financial inclusion. They also recommended removing taxes on non-cash transactions and eliminating trading margins in the foreign exchange market. The meeting noted that the use of Zimbabwe Gold (ZiG) as a means of exchange could help in the overall stability of the Zimbabwe dollar. We present the resolutions of the MPC below. ---------- Latest itel S24 available on Pindula: 128GB storage, 4GB RAM $119 USD WhatsApp: +263715068543 Calls: 0772464000 Buy Online: https://www.pindula.co.zw/market/itel-s24-128gb-22-20240426142756795795/?s=wanews ---------- *RESOLUTIONS OF THE MONETARY POLICY COMMITTEE MEETING HELD ON 23 October 2023* > The Monetary Policy Committee (the MPC) of the Reserve Bank of Zimbabwe (the Bank) met on 23 October 2023 and deliberated on recent macroeconomic and financial developments in the economy. > The MPC was pleased with the relative exchange rate and price stability obtaining in the economy since June 2023. The MPC noted, with emphasis, the need to ensure that inflation expectations continued to be firmly anchored through urgent attention to any emerging risks. The MPC also noted that there was need to continue promoting solutions that were aligned with the digital space and plastic money environment that the country found itself in and, in that regard, the MPC applauded the Bank for continuing to engender financial inclusion in a market-based and cash-lite driven economy. > The MPC noted that the negative impact of emerging global risks, including subdued global growth emanating from geo-economic fragmentation and the effects of tight monetary policy, high interest rates, credit squeeze and low international commodity prices, could pose significant risks to the current stability in the domestic economy. Global growth was expected to slow down from 3.5% in 2022 to 3.0% in 2023 and to 2.9% in 2024, which is far below the historical average of 3.8%. > Due to the negative developments in the global economy, prices for most mineral commodities including platinum, nickel and lithium have been declining, negatively affecting export receipts in the economy. As a result, export receipts, which are the main source of foreign currency for both the wholesale and retail foreign exchange auctions and for servicing the country’s foreign commitments, fell by 9% over the nine months to September 2023, from US$4.5 billion during the comparable period in 2022 to US$3.6 billion. > Considering the emerging global risks and the need to keep exchange rate and inflation expectations anchored to support economic growth, the MPC made the following resolutions: *Interest Rates* > With immediate effect, the Bank Policy rate has been reduced from 150% to 130% per annum and the Medium-term Bank Accommodation (MBA) interest rate for the productive sectors including individuals and MSMEs will be maintained at 75% per annum. *Foreign Currency Retentions* > With effect from 1 November 2023, foreign currency retentions on exports shall be standardised at the level of 75% across all sectors of the economy and all special dispensations granted to some sectors of the economy shall be removed. The net effect of this measure is to increase foreign exchange resources available to the Bank and Government to meet foreign exchange requirements for the settlement of national and international obligations. *Promotion of No-Frills (Low-Cost) Bank Accounts* > Financial institutions are encouraged to scale up financial inclusion through opening of more no-frills (low-cost) accounts. This measure will promote more usage of banking services and financial products, including increased use of bank cards, digital financial services and other cash-lite means of payments in the economy. In order to complement efforts to formalise the economy and to give more impetus to the use of non-cash-based means of payment in the economy, it is recommended that Government considers removing Intermediated Money Transfer Tax (IMTT) on transactions that are intermediated through plastic bank cards and other digital platforms. *Trading Margins* > In order to support the continuous fine-tuning and further liberalisation of the foreign exchange market, with a view to guaranteeing and safeguarding exchange rate stability, it is recommended that the limit of 10% trading margin above the interbank rate be removed. *Zimbabwe Gold (ZiG)* > Since its introduction as a medium of exchange on 5 October 2023, the use of ZiG has been embraced widely in the economy and its continued dual use as a value-preserving instrument and a medium of exchange in the economy will go a long way in supporting digitisation, financial inclusion and the overall stability of the local currency. > The MPC will remain alert to attend to any emerging risks, emanating from both the domestic and international fronts, in its commitment to ensuring stability in the exchange rate and general price levels. *More Pindula News* _If you found this article useful_ *Please support Pindula by forwarding to friends and groups*
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