Zimbabwe’s central bank has raised its policy rate to a record high of 200 percent in a move aimed at aligning interest rates with surging commodity prices and exchange rate developments.
Reserve Bank of Zimbabwe (RBZ) governor said on Monday that the bank’s Monetary Policy Committee had decided to hike its policy rate from 80 percent per annum with effect from July 1.
“The committee noted that the increase in inflation was undermining consumer demand and confidence and that, if not controlled, it would reverse the significant economic gains achieved over the past two years,” Mangudya said in a statement.
He said the measure aimed to rein in inflation and stabilize the exchange rate.
Annual inflation quickened to 191.6 percent in June from 131.7 percent the previous month on the back of supply bottlenecks triggered by the Russia-Ukraine war and lingering effects of the COVID-19 pandemic.
The local currency has depreciated nearly 70 percent since the beginning of 2022 to Z$352 against the US dollar on the official market. The depreciation has been higher on a thriving parallel market where the US greenback is trading above Z$650.
JN/APA