Zimbabwe Interest Rates: Mthuli Ncube Backs Further Cuts

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HARARE – Finance Minister Professor Mthuli Ncube has signalled that Zimbabwe could accommodate further interest-rate reductions as inflation remains in single digits, raising expectations of cheaper borrowing costs for businesses and households.

Ncube said the inflation outlook provided room for lower interest rates, although he emphasised that the decision rested with the Reserve Bank of Zimbabwe’s independent Monetary Policy Committee (MPC).

“With inflation holding in single digits, there is room to cut interest rates further,” Ncube said.

His remarks come as policymakers seek to translate recent gains in price stability into stronger private-sector investment, business expansion and economic growth.

The Reserve Bank reduced its policy rate from 35% at the beginning of 2026 to 30% in June and 27.5% in September, as inflationary pressures moderated. Annual inflation was reported at 2.9% in August and 3.7% in September, while October’s latest weighted annual inflation figure eased to 3.5%.

However, the reduction in the policy rate has yet to translate fully into cheaper commercial lending. The average bank lending rate stood at 42.26% in September, highlighting the substantial cost of borrowing still facing businesses.

The gap between the central bank’s benchmark rate and commercial lending rates remains a concern for manufacturers, farmers and exporters, many of whom require affordable working capital to increase production, purchase equipment and finance trade.

The RBZ has previously urged banks to bring lending rates closer to the policy rate, arguing that expensive credit risks excluding productive businesses from formal financing.

For Zimbabwe, lower borrowing costs could support domestic manufacturing, agricultural production and import substitution while improving the competitiveness of companies seeking to expand into regional markets.

Ncube’s remarks also underline the distinction between fiscal and monetary policy. While Treasury is responsible for government spending, taxation and public debt management, the MPC independently determines monetary policy and the appropriate pace of interest-rate adjustments.

A further reduction, however, will depend on the sustainability of the disinflation trend, exchange-rate stability and broader liquidity conditions. Policymakers will be keen to avoid easing too aggressively and undermining the price stability achieved over recent months.

The immediate test will be whether further monetary easing translates into lower commercial lending rates and greater access to finance for productive sectors.

For businesses, the significance of Ncube’s signal will ultimately be measured not by the policy rate alone, but by the cost of borrowing at the bank counter.