gtag('config', 'UA-12595121-1'); World’s Highest Interest Rates May Rise Further, Says Zimbabwe Central Bank Governor – The Zimbabwe Mail

World’s Highest Interest Rates May Rise Further, Says Zimbabwe Central Bank Governor

HARARE, ZIMBABWE - AUGUST 05: Street vendors sell goods in a market on August 05, 2018 in Harare, Zimbabwe. Zimbabwe Electoral Commission (ZEC) officials have announced the re-election of President Emmerson Mnangagwa of the ruling Zimbabwe African National Union - Patriotic Front (ZANU-PF). The election was the first since Robert Mugabe was ousted in a military coup last year, and featured a close race between Mnangagwa and opposition candidate Nelson Chamisa of the Movement for Democratic Change (MDC Alliance). Deadly clashes broke out earlier in the week following the release of parliamentary election results, amid allegations of fraud by Chamisa and MDC supporters. (Photo by Dan Kitwood/Getty Images) , Photographer: Dan Kitwood/Getty Images Europe
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HARARE (Bloomberg) –Zimbabwe’s central bank warned it may raise interest rates even further if price-growth accelerates.

“If we see inflation going up in February and in March, brace up for very high interest rates,” Reserve Bank of Zimbabwe Governor John Mangudya told business leaders Thursday in the capital, Harare. He didn’t provide details on how much further the bank is prepared to raise rates.

Zimbabwe’s official rate is 60% — higher than the borrowing cost in any of the 57 nations and the Euro region ranked by Bloomberg. Annual inflation in the southern African nation was 60% in January, having fallen from a peak of 837% in July 2020.

“There is a trade off between inflation and high interest rates, all central banks are tightening monetary policies so that we can get out of high inflation,” Mangudya said.

U.S. inflation accelerated to 7.5% in January, its highest in four decades.

The Zimbabwean unit of Standard Bank Group said last week it expects the authorities won’t meet their target of reducing the inflation rate to 25% to 35% this year. Price increases are being fueled by growing use of the U.S. dollar to pay for most transactions amid a lack of confidence in the local currency.

The nation’s currency trades informally at 230 per U.S. dollar on the streets of Harare, almost double the official exchange rate of 120 per U.S. dollar.