Zimbabwe’s central bank has chosen to keep its benchmark interest rate at 35%, despite inflation slowing sharply to 3.8% year-on-year in February 2026, indicating a deliberate shift to stability first, growth second.
“We need to make sure inflation is anchored first,” Governor John Mushayavanhu told journalists. “Therefore, the policy rate will remain at 35%.” On its surface, looks conservative. In reality, it reflects one of the most consequential monetary experiments in Africa today, the defence and consolidation of a gold-backed currency, the Zimbabwe Gold (ZiG), first introduced in April 2024.
READ ALSO: World Bank Report: Africa’s Gender Equality Laws vs Reality
To understand what Zimbabwe’s 2025 economic developments mean, one must look beyond the central bank’s rate decisions and examine the broader macroeconomic recovery taking shape. Following a weak 2024 growth period of approximately 1.7–2.0%, Zimbabwe rebounded strongly in 2025 with real GDP growth estimated between 6.0% and 6.6%, driven by a projected 21% expansion in agriculture alongside robust mining performance in gold, lithium, and platinum. With nominal GDP reaching approximately $53.3 billion and GDP per capita around $3,071, the Reserve Bank of Zimbabwe played a central stabilising role in this recovery, anchoring the broader economic architecture now unfolding.
The Reserve Bank of Zimbabwe’s decision to maintain the policy rate at 35% reflects a deliberate strategy to prioritise hard-won monetary credibility over premature stimulus, despite significant disinflation progress. With year-on-year inflation declining from 4.1% in January 2026 to 3.8% in February, and monthly inflation at just 0.1%, Zimbabwe has achieved a dramatic departure from its hyperinflationary history. Governor Mushayavanhu’s resistance to rate cuts demonstrates a clear doctrinal commitment: monetary stability must be firmly anchored before any expansionary pivot, recognising that credibility, once lost, is exceedingly difficult to rebuild.
The introduction of the Zimbabwe Gold (ZiG) currency by the Reserve Bank of Zimbabwe in April 2024 marked a fundamental structural shift in the country’s monetary framework, replacing years of volatility with a reserve-backed system anchored by physical gold and foreign currency holdings. In mid-2025, reserves had grown to exceed $700 million, with gold reserves surpassing three tonnes, stabilising the interbank exchange rate around ZiG 25–26 per US dollar. The strategy, colloquially branded “ZiG Bho” (“ZiG is good”), represents a deliberate effort to rebuild trust in a local unit after the traumatic collapse of previous currencies, with the current 35% policy rate decision serving to protect that hard-won credibility.
This monetary discipline must be understood within Zimbabwe’s painful historical trajectory: from post-independence stability through the 2000–2008 hyperinflationary collapse that rendered the Zimbabwe dollar worthless, followed by dollarisation (2009–2018) that restored stability but sacrificed monetary sovereignty, and renewed currency volatility between 2019 and 2023. The ZiG framework represents a return to monetary basics, reserve backing, strict money supply control, and Treasury responsibility for fiscal deficits that distinguishes the current approach from previous failed experiments.
Despite persistent challenges, including dollarisation dominance and historical trust deficits, this discipline has created conditions for sustainable growth, if stability holds, investment confidence will rise, and the 2030 de-dollarisation target becomes achievable. For a nation where monetary instability once erased savings overnight, treating stability as the essential precondition for growth represents Zimbabwe’s most transformative shift.
