The Central Bank in Zimbabwe, citing high inflation, Wednesday increased interest rates to dampen consumptive and speculative borrowing. In a statement, bank governor Gideon Gono said the rate for unsecured borrowing had gone up to 5,000 per cent from 4,500 per cent, and that for secured borrowing to 4,500 per cent from 4,000 per cent. He said this was in response to rising inflation, which currently stands at 165,000 per cent, the highest in the world. “The country’s inflation level remains the economy’s number one enemy. It is for this reason that the Reserve Bank will continue to maintain tight monetary conditions,” he said. “Consistent with this challenge, interest rates have been increased…,” Gono said.
The bank has in the past, heavily relied on interest rate hikes to contain inflation, but this largely failed to bring this under control.
