Zimbabwe hikes interest rate by 200 percent to combat surging inflation

Zimbabwean five and two dollar bond banknotes, nicknamed zollars, are displayed in an arranged photo in Harare, Zimbabwe, on Friday, Dec. 29, 2017. Zimbabwean President Emmerson Mnangagwa said his new administration will woo investors and embark on an all-out business initiative to revive an economy that has halved since 2000 and provides jobs for just one in 10 Zimbabweans. Photographer: Waldo Swiegers/Bloomberg via Getty Images

The Reserve Bank of Zimbabwe (RBZ) on Monday announced an increase in the country’s interest rate from 80 percent to 200 percent from July 1 as part of measures to contain surging inflation in the southern African nation.

In a statement, RBZ governor John Mangudya noted the Monetary Policy Committee (MPC) was greatly concerned by the rise in inflation which had increased to 30.7 percent on a month-on-month basis for June 2022 thereby increasing the year-on-year inflation for June 2022 to 191.6 percent.

FILE PHOTO: Zimbabwean five and two dollar bond banknotes in Harare, Zimbabwe. /Getty Images

Mangudya added that failure to rein in inflation would undermine consumer demand and confidence and reverse the significant economic gains the country had achieved over the past two years.

The RBZ also resolved to introduce gold coins into the market as an instrument that will enable investors to store value.

On Saturday, Zimbabwean President Emmerson Mnangagwa told the national conference of the ruling ZANU-PF party that government would announce new measures to tackle inflation.

Local media reported that Finance minister Mthuli Ncube is also expected to outline new government measures to address the economic situation.

Zimbabwe, already a struggling economy, has one of the highest inflation rates in the world and its currency, the Zimbabwean dollar, has been losing value against the U.S. dollar.

An already high cost of living standard and shortage of goods has been exacerbated by Russia’s military operations in Ukraine which has resulted in high global food, oil and fertilizer prices.

(Story compiled with assistance from wire reports)