The Reserve Bank of Zimbabwe’s Monetary Policy Committee (MPC) has reduced its key interest rate from 30% to 27.5% with immediate effect.

The decision, announced on Monday following the committee’s meeting, marks a cumulative 7.5 percentage point reduction in policy rates since June 2026.

Central bank Governor Dr John Mushayavanhu attributed the rate cut to a benign inflation environment and sustained macroeconomic stability across the country.

“The MPC further emphasised that the reduction in the Bank policy rate does not signal monetary easing, but a realignment of the policy rate to the observed inflation dynamics,” Dr Mushayavanhu said in a statement.

He added that the MPC has embarked on a gradual path of monetary policy normalisation against the backdrop of entrenched macroeconomic stability and better-anchored inflation expectations.

“The pace of monetary policy adjustment will remain dependent on prevailing monetary and financial conditions, taking into consideration uncertainties arising from climatic shocks and geopolitical tensions,” the Governor said.

In addition to lowering the main policy rate, the central bank reduced the interest rate on its Targeted Finance Facility from 15% to 12.5% while keeping the cap on bank lending rates to productive sectors at 22.5%.

The committee opted to maintain existing statutory reserve requirements, 30% for demand deposits and 15% for savings and time deposits, and left minimum deposit interest rates unchanged.

The policy decision comes against a backdrop of stabilising domestic inflation and strengthening foreign reserves.

Annual ZiG inflation fell to a record low of 2.9% in August 2026 before edging up to 3.7% in September, primarily driven by rising international crude oil prices, which crossed US$100 per barrel earlier in the month.

Month-on-month inflation averaged 0.4% between January and September 2026, keeping full-year inflation on track to finish below 7%.