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Top economist calls for job rich centered Monetary Policy

By Staff Writer

LABOUR and Economic Development Research Institute of Zimbabwe (LEDRIZ) has called for the inception of job growth centered Monetary Policy Statements (MPS) amid concerns that the current stipulated withdrawal limits do not reflect price structures.

Speaking recently, LEDRIZ senior researcher, doctor Prosper Chitambara said it is time authorities broadened their focus on the MPS.

“There is urgent need for the MPS framework to be carried in line with the dual mandate where focus is not only placed on price stability and inflation reduction but also on employment and job creation. This is a best practice being employed in countries like the US,” he said.

The top economist argued that unlike the current setup where focus is on price stability, the dual mandate is that it is actually premised on three goals which are achieving maximum employment;  stable prices and  moderate long-term interest rates.

He also decried the fact that the current withdrawal limits in the latest MPS do not reflect the price hikes being faced by workers.

The remarks come shortly after the RBZ first Monetary Policy Statement (MPS) for the year 2022 moved to deal with excess cash, inflation reduction and stabilising the local currency.

Delivered under the theme, “Stay on Course”, the MPS bank reviewed downwards the quarter-on-quarter reserve money target from 10% to 7,5% for the quarters ending March and June 2022, which target will be reviewed thereafter.

The MPS said the measure is aimed at mopping up excess cash which the authorities have since blamed for fuelling exchange rate depreciation on the parallel market and speculatively increasing inflation.

“The revised quarterly reserve money growth target is consistent with the envisaged economic growth rate of 5.5% in 2022 and the expected year-end inflation of 25-35 %,” said the MPS.

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