Zimbabwe Lifts Key Rate to 35%

Zimbabwe's central bank raised by 150 bps its benchmark interest rate to 35% during a meeting held on September 27th, 2024, pushing borrowing costs at their highest since March.

Governor John Mushayavanhu said it was taking steps, to combat inflation including allowing “greater exchange rate flexibility, in line with the increased demand for foreign currency in the country." The central bank also devalued its gold-backed currency, ZIG, by 43%, following persistent weakness.

The ZiG, backed by Zimbabwe’s gold and hard currency reserves, was introduced in early April to replace the Zimbabwean dollar, which had depreciated by about 80% since the beginning of the year.

Zimbabweans currently use the ZiG in 40% of transactions, with the remaining transactions carried out in US dollars, contributing to the ongoing dollar shortage.