Source: RBZ governor denies external interference in monetary policy decisions – herald
Business Reporter
THE Reserve Bank of Zimbabwe has pushed back against suggestions that monetary policy decisions are directed from outside, with a senior official revealing that board meetings are characterised by robust debate — sometimes to the point of near conflict — before consensus is reached.
Speaking at a post monetary policy breakfast meeting organised by the Confederation of Zimbabwe Industries on Thursday, RBZ Governor Dr John Mushayavanhu — whose remarks come amid ongoing discussions about currency stability and inflation management — offered a rare behind the scenes glimpse into the central bank’s decision making processes.
“Whenever we meet, we have never had an instruction or a directive from anywhere to say you shall increase interest rates, you shall reduce this,” Dr Mushayavanhu said. “We argue amongst ourselves. Sometimes to the point where we almost want to fight – except that it would be virtual. And there’s no gun to anyone’s head, because ultimately we come up with a consensus.”
The comments appear aimed at persistent speculation that monetary policy adjustments are influenced by political considerations rather than technical economic analysis.
Governor Mushayavanhu linked the quality of internal debate directly to the central bank’s credibility, emphasising transparency as a critical component of building public trust.
“Credibility also has something to do with transparency. And central bank communication — not just with markets but with everyone — is vital. Every time after a Monetary Policy Committee meeting, we go out in the newspapers and say exactly what we have decided, what we arrived at. We do that because we are taking the people with us.”
Dr Mushayavanhu acknowledged that credibility also requires accountability when things go wrong.
“You also need to be accountable. If something has gone wrong, you admit it. We are human beings. We make mistakes. Sometimes we have had to listen to what we had said, and we have had to change policy.”Despite policy adjustments along the way, Dr Mushayavanhu stressed the central bank’s commitment to a consistent strategic direction.
“From April last year, we have said we want prudent monetary policy management. And prudent does not necessarily mean tight or loose.”
The remarks come as the Reserve Bank navigates a delicate balancing act — maintaining sufficient monetary discipline to anchor inflation expectations while ensuring the economy has adequate liquidity to function.
Since the introduction of the ZiG currency, the central bank has maintained a policy rate of 35 percent and has emphasised a conditions based approach to any future monetary reforms.
The Governor’s defence of the bank’s independence and transparency reflects growing awareness that institutional credibility is the bedrock upon which any lasting currency stability must be built.
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