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Inflation Targeting As A Monetary Policy Tool To Reign In Currency Crisis In Zimbabwe

Before South Africa adopted inflation targeting - the SARB used several different monetary policy tools which include exchange rate targeting and money supply targeting By Clement Mupfunya Since 2000, the challenges of inflation became so severe that the Zimbabwe economy got gripped in a bout of hyperinflation which spurred a sharp weakening of local currency and trigged a de-anchoring of inflation expectations. Initially, the government through Reserve Bank of Zimbabwe (RBZ) responded by imposing price controls in an attempt to rein inflation, this reaction by RBZ sparked widespread shortages of products and promoted parallel economy popularly known as black-market economy. Zimbabwe's annual consumer price inflation climbed further to 285% in August 2022, from 256, 9% in the prior month. It was the highest reading since February of 2021. In the same way, local currency continues to plunge even after RBZ had bring into effect gold coins to stabilize the economy. On a monthly basis, consumer prices rose 12, 4%, the least in five months following a 25, 6% jump in the previous month.

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