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Zimbabwe's central bank raises lending rate to 70% to curb inflation

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Zimbabwe's central bank raises lending rate to 70% to curb inflation

Zimbabwe's central bank increased its overnight borrowing rate to 70% from 50% to curb soaring inflation and support the country's currency.

The continued surge in the prices of goods and services remains a major challenge for Zimbabwe's economy, the central bank said. Annual headline inflation spiked to 175.5% in June from 56.9% in January.

The central bank warned that inflation could rise above 200% in the near term. However, it also expects inflation to slow down beginning in October before moderating by the end of 2019.

"The bank expects inflation to start declining after the current high inflation cycle ends, as attested by ebbing exchange rate depreciation pressures, following the removal of the multicurrency system," the Reserve Bank of Zimbabwe said in its monetary policy statement on Sept. 13.

Zimbabwe abolished its multicurrency regime in June and reintroduced the Zimbabwe dollar.