RBZ MPC Statement (Comment)
1) Having the interbank market to use a Reuters based platform is welcome.This will allow price discovery and transparency.However there has to be a mechanism for the RBZ to allow willing sellers of forex to indicate their parcels through the same
1) Having the interbank market to use a Reuters based platform is welcome.This will allow price discovery and transparency.However there has to be a mechanism for the RBZ to allow willing sellers of forex to indicate their parcels through the same
2) Reserve Money growth of 80% is too big for an economy that is growing at under 5% p.a. On the other end the projected overall reserve money growth of under 50% is still too high for an economy that is expected to weaken by 6,5%. Excess liquidity in the market
3) Worringly, the RBZ has hinted at a guided liquidity management framework for the market to even out liquidity skewness towards a few corporates.This move is likely to result in Banks being forced to invest their money with the RBZ at low interest rates.
4) The printing of more cash to be exchanged for RTGS is a welcome mive as this will help to eliminate the RTGS/Cash premiums currently witnessed. However there is need to contain money supply growth through wantom printing of money as witnessed in 2008 outside the RTGS balances
2) Reserve Money growth of 80% is too big for an economy that is growing at under 5% p.a. On the other end the projected reserve money growth of under 50% is still too high for an economy that is expected to weaken by 6,5%. Excess liquidity in the market affects the xchange rate
