Zimbabwe’s central bank on Monday more than doubled its key interest rate to an enormous 200 percent, the highest in the world as the southern African country clashes hyperinflation.
Annual inflation more than doubled in two months to reach 191 percent in June, strengthening fears of a return to 2008 hyperinflation period where savings smeared out.
The bank’s governing committee publicized in a declaration the whooping interest rate upsurge after expressing “great concern” on the recent gallop in inflation
“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,” bank governor John Mangudya said.
The benchmark interest rate was last higher to 80 percent in April from a foregoing 60 percent.
Central banks around the world have been raising rates to fight inflation as energy and food prices have climbed in the wake of Russia’s invasion of Ukraine and supply chain disturbances.
Zimbabwe is in the throes of an economic decay.
The value of the local currency has also suffered main headwinds, dropping more than two thirds of its value this year.
Alone to become one of the continent’s worst execution currencies, rendering to Bloomberg.
Rising prices recover grim memories of hyperinflation that was so bad in 2008 that the central bank issued a Z$100-trillion note, which has now become a collectors’ item.
The government then discarded the local currency and adopted the US dollar and the South African rand as legal tender.
But in 2019 the government reintroduced the Zimbabwean dollar, which has quickly been declining in value.
The currency used parallel to the greenback.