Monetary Developments

Monetary Developments

41. The Bank continued to implement a conservative monetary targeting framework to contain money supply growth and avert attendant pressures on exchange rate and inflation. In this regard, quarter on quarter reserve money growth target for 2021 was progressively reduced from 22.5% during the first two quarters of 2021 to 20% in the third quarter, and further down to 10% in the fourth quarter of the year. The downward revision was necessitated by the need to further tighten monetary policy in response to resurgence of inflationary and exchange rate pressures in the economy.

42. The successive revisions in quarter-on-quarter growth targets saw reserve money being reduced to ZW$25.49 billion as at the end of December 2021, well within the fourth quarter target of ZW$28.9 billion. The quarter-onquarter reserve money growth rate fell by 1.14%, against a target of 10%.

This was despite the once-off increase in statutory reserves following the upward revision of the statutory reserve requirement ratio for demand/call deposits from 5% to 10%. Figure 6 shows reserve money developments throughout the year 2021.