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ZB Warns Against Introduction Of New Money Into The Money Supply

ZB Financial Holdings Limited has warned that efforts to stem the inflation surge may fail if the central bank introduces new money into the money supply, a process called quantitative easing, to fund elections and to pacify a restive civil service.

Quantitative easing was one of the factors blamed for the collapse of Zimbabwe’s dollar in 2008 as annual inflation hit a record-high 231 million per cent as per official statistics.

Annual inflation shot to 96,4% last month, from 72% in March, placing Zimbabwe among economies with the highest rates in the world.

On Tuesday the Reserve Bank of Zimbabwe (RBZ) vowed to continue fighting recent turbulences.

But ZB chairperson, Pamela Chiromo, said while there may be improvements in the inflation outturn, threats won’t go away. In a commentary on financial statements for the year ended December 31, 2021, Chiromo said:

The inflation outturn is expected to continue improving in 2022, supported by a tight monetary policy, complemented by fiscal discipline. 

However, the slow-down in inflation remains under threat from possible expansion in the monetary base to fund obligations such as civil service wage increases and the 2023 harmonised national elections, the widening gap between the formal and alternative market exchange rates, among other factors.

ZB said increases in international commodity prices remained a factor of concern.

In a statement issued after a monetary policy committee meeting on April 29, the RBZ on Tuesday shifted the blame for Zimbabwe’s deteriorating crisis to confrontations between Russia and Ukraine.

The RBZ governor said despite the troubles, fundamentals remained strong, with a “stable” exchange rate and healthy foreign currency inflows.

More: NewsDay Zimbabwe

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One Comment on “ZB Warns Against Introduction Of New Money Into The Money Supply

  1. Zimbabwe travelled this same very muddy road in 2008 and was rescued through dollarization and the sooner the ZANUPF coterie of looters see sense in this(dollarization) the BETTER….

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