Figure 19: Inflation Outlook

period. Moreover, the significant increase in locally produced goods to current levels of over 80%, coupled with policies announced in this Statement, is expected to reduce inflationary pressures in the economy.

159. More specifically, the envisaged sustained tighten monetary policy stance will go a long way in anchoring price spectrums in the economy. As a result, month-on-month inflation is expected to be reduced to below 4% in the first quarter of the year and to average below 3% in the second half of 2022. This path is expected to reduce the country’s annual inflation rate to a range of 25-35% by end of December 2022 as shown below in Figure 19.

Figure 19: Inflation Outlook

900%

675%

450%

225%

0%

Dec-19 Mar-20 Jun-20 Sept-20 Dec-20 Mar-21 Jun-21 Sept-21 Dec-21 Mar-22 Jun-22 Sept-22 Dec-22 Baseline Policy

Source: RBZ

160. The tight monetary stance will be buttressed by a strong liquidity management programme being administered jointly by the Bank and Fiscal Authorities. In this regard, the Bank is pleased with the Fiscal Authorities’ efforts in managing the liquidity implications of Treasury outlays. Going forward, Treasury and the Bank will continue to strengthen the Liquidity Management Committee, which is made up of the Bank and Treasury staff to ensure proper sequencing and sterilisation mechanisms to maintain monetary stability.

161. Surveillance activities will also be enhanced to curb malpractices and cases of breaches of the Bank Use Promotion Act, currency manipulation and abuse of the auction system by some individuals and business entities.