Zimbabwe hikes lending rate to 70%

Zimbabwe hikes lending rate to 70%
INFLATION UNCHECKED: A vendor sells tomatoes in Macheke. Zimbabwe is relaunching its currency to curb inflation. - Reuters

By Reuters

Published: Fri 13 Sep 2019, 11:36 PM

Last updated: Sat 14 Sep 2019, 1:41 AM

Zimbabwe's central bank said on Friday that it had raised its overnight borrowing rate from 50 per cent to 70 per cent after a surge in inflation and a steep fall in the domestic currency.
Zimbabweans face triple-digit annual inflation as the government has taken steps to relaunch a national currency.
Central bank governor John Mangudya said in a monetary policy statement that increasing interest rates would stabilise inflation, last published at 175 per cent in June, and ease pressure on the exchange rate.
The bank renamed the interim RTGS currency the Zimbabwe dollar on June 24, since when it has lost 51 per cent of its value to trade at 12.8878 to the US dollar on Friday, according to central bank data.
"The bank expects inflation to start declining after the current high inflation cycle ends, as attested by ebbing exchange rate depreciation pressures, following the removal of the multicurrency system," Mangudya said.
The central bank added that it was introducing dollar-denominated savings bonds with a 3-year tenor and an interest rate of 7.5 per cent to try to stimulate greater saving.
Zimbabwe's finance minister on Wednesday announced the appointment of a monetary policy committee at the central bank as part of a set of reforms aimed at removing economic distortions and boosting confidence in policymaking. - Reuters

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