Zimbabwe’s central bank raises interest rate to 200%

File photo: A man shows a wad of new Zimbabwe two dollar notes he received from a bank in Harare. AFP

Annual inflation more than doubled in two months to 191% in June, stoking fears of a return to the 2008 period of hyperinflation when savings were wiped out.

The bank’s board of directors announced the sharp rise in interest rates in a statement after expressing “great concern” over the recent run-up in inflation

“The committee noted that rising inflation was undermining consumer demand and confidence and, if left unchecked, would undo the significant economic gains made over the past two years,” the official said. bank governor, John Mangudya.

The benchmark interest rate was last raised to 80% in April from 60% previously.

Central banks around the world raised rates to fight inflation as energy and food prices soared following Russia’s invasion of Ukraine and disruptions in the supply chain.

Zimbabwe is in the throes of economic decline.

The value of the local currency has also suffered major headwinds, losing more than two-thirds of its value this year alone to become one of the continent’s worst-performing currencies, according to Bloomberg.

Rising prices bring back dark memories of hyperinflation which was so severe in 2008 that the central bank issued a 100 trillion Zimbabwean dollar note, which has now become a collector’s item.

The government then abandoned 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 quickly declined in value.

The currency was used alongside the greenback.

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Stephen V. Lee