(MENAFN- The Peninsula) Bloomberg
Harare: Zimbabwe's central bank cut its benchmark interest rate for the first time since becoming the world's most aggressive monetary authority in June on expectations that the downward trend in inflation will continue.
The policy committee lowered the rate to 150% from 200%, Governor John Mangudya said in a statement on Thursday.
The Reserve Bank of Zimbabwe's monetary policy committee is the second central bank on the continent after Angola to cut rates this year at a time when most are still raising borrowing costs to temper inflation.
'The moderation in interest rates is important and necessitated by the downward trend in the month-on-month inflation since the last quarter of 2022, which saw monthly inflation falling from 12.4% in August 2022 to 2.4% in December,” said Mangudya. 'The bank expects the downward trend in inflation to continue into 2023 as evidenced by the 1.1% reduction in monthly inflation in January.”
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Drastic measures since June, including raising interest rates to a record and easing controls over the foreign-exchange market to deal with a widening gap between the official and unofficial rate, have helped contain surging inflation and initially stabilized the nation's tumbling currency.
Annual price growth slowed for a fifth straight month in January to 230% and the monthly inflation rate has been below the central bank's 3% target since November.
The central bank said it will adopt a so-called blended consumer price index as the inflation benchmark because it takes account of the growing use of US dollars in the economy.
Annual blended inflation was 102% in January and 0.7% month-on-month.
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