The country’s central bank seriously need to rethink its approach in formulating and communicating policies and hopefully the newly announced Monetary Policy Committee and the new Board will bring the much needed change.
This is because, not putting much thought and attention to detail can affect how its policies are viewed and accepted by economic players and the public in general.
At a time when confidence levels are low, and every move made by the central bank or treasury is under scrutiny, the central bank needs to be thorough in what it puts out there.
Nothing should be taken for granted or left to chance as small discrepancies can undermine confidence.
Interestingly, it’s something that the central bank is also aware of and promised to address going forward.
In its Mid-Term Monetary policy statement released last week, the central bank underlined effective communication of its policies and activities as a focus area.
“The bank will be transparent in its monetary policy interventions in order to anchor inflation expectations. In addition, the bank shall also strengthen communication with relevant stakeholders, including through the timely publication of monetary and the bank’s balance sheet data.
“This will be aimed at promoting a two-way feedback mechanism that strengthens stakeholder understanding of monetary policies,” reads the MPS in part.
Now here is some feedback.
While the central bank states that it would want to “strengthen communication with relevant stakeholders,” the latest MPS comes as a false start as it contains some statements that could have made sense had it been released early in July and not September 2019.
It clearly shows the statement was prepared a while back and the RBZ only added a few things but didn’t bother to remove or amend statements that were overtaken by events.
Take for instant the statement below.
“Similarly, the exchange rate depreciation has been contained and the interbank rate has stabilised following the removal of the multiple currency system in June 2019.”
Now this is a statement being delivered on September 13,2019. Of what bearing is it when the exchange rate has gone out of hand even on the formal interbank market.
The runaway rate has moved from 1:6.6 at the end of June to a rate of 1:14.12 as of Thursday this week. It’s been volatile. Stakeholders would have expected the central bank to amend the statement or at least include additional information on what has happened and what need to be done to once again contain and stabilise the exchange rate.
Another statement that seemed out of place and showed the RBZ’s disregard to detail is one that referenced to July 2019 as if we are yet to get to that month.
“These speculative tendencies were significantly addressed by the abolition of the multi-currency system, and we expect the practices to have subsided by the end of July 2019.”
Its two months after July so the central bank should not be saying “we expect” but should be saying “we expected” the practice to have subsided by the end of July 2019. Maybe it could have added that what “we expected was however not to be as speculative tendencies are still with us.”
Then there is another statement where the MPS reads:
“In line with continued innovation and further enhance efficiency, banks are working on a fully fledged bulk payments local solution which is expected to go live end of July 2019.”
Is this July 2019 yet to come? Wouldn’t it make sense to give an update on the latest developments given the system “was” expected to go live in July 2019? Did it indeed go live as “expected”? How is it performing two months down the line?
These might seem like little things, but to the probing eye and to the apprehensive heart or mind it’s a big deal, it does not inspire confidence. It makes one feel like they are not being taken seriously.