Zimbabwe’s Inflation Plunges, RBZ Predicts Further Drop By Year-End

The Monetary Policy Committee (MPC) of the Reserve Bank of Zimbabwe (RBZ) met on 1 December 2025 to review recent economic and financial developments, and to consider the outlook for the country’s economy.

In a statement, Central Bank Governor John Mushayavanhu said the MPC welcomed encouraging progress on inflation.

Annual inflation, measured by the Zimbabwean Index of Goods (ZIG), has fallen sharply from 82.7% in September to 32.7% in October, and then further to 19.0% in November 2025, as the effects of previous price bases eased.

Governor Mushayavanhu added that inflation is expected to continue declining, with projections for the end of 2025 now at 15–17%, an improvement on the earlier forecast of 20–30%. He said:

“For the first time in more than 20 years, local currency annual inflation is expected to reach single-digit levels in the first quarter of 2026.

“Importantly, the maintenance of a prudent monetary policy stance since September 2024 has been critical in supporting the disinflation process and general macroeconomic stability.”

Governor Mushayavanhu said the economy is expected to grow by 6.6% in 2025, supported by robust performances in the mining and agriculture sectors, despite uncertainties in the global economic outlook.

He added that Zimbabwe continues to benefit from strong foreign currency inflows, driven by steady growth in both export earnings and remittances. He said:

“In the 10 months to October 2025, total foreign currency inflows amounted to more than US$13 billion, over a 21% increase compared to the same period in 2024.

“Reflective of the sustained foreign currency inflows, foreign currency reserves backing the ZIG reached current levels of about US$1 billion, equivalent to more than 1.2 months of import cover.

“This has underpinned the smooth functioning of the foreign exchange market under the Willing-Buyer Willing-Seller (WBWS) arrangement.

“Notably, the increase in foreign currency inflows ensured that the foreign exchange market fully met all bona-fide import and foreign payment requirements.”

Governor Mushayavanhu said the MPC noted that these positive monetary and financial developments indicate that Zimbabwe is making progress towards meeting the Conditions Precedent (CPs) for a transition to a single currency by 2030, as outlined in the 2026 National Budget and National Development Strategy 2 (NDS2).

He said the recent reduction of the Intermediated Money Transfer Tax (IMTT) on ZIG-denominated transactions from 2% to 1.5% is a key measure to support the wider use of the domestic currency, promote financial inclusion, and reinforce the eventual shift to a single currency.

In line with NDS2 objectives and the goal of firmly anchoring inflation expectations, the MPC has decided to “stay the course” with the current monetary policy.

This means keeping the Bank Policy Rate at 35%, maintaining statutory reserve requirements at 15% for savings and time deposits, and at 30% for demand and call deposits in both local and foreign currencies.

Mushayavanhu added that once a low and stable inflationary environment is established, interest rates will gradually be normalised to encourage private sector lending and investment, creating favourable conditions for medium-term economic growth.