Zimbabwe hikes bank policy rate to 200% in bid to tame inflation

That country's central bank says the increase in its policy rate to 200% from 80% will take effect from 1 July after annual inflation hit almost 192% this month.

FILE: Zimbabwean flag. Picture: Thomas Holder/EWN

JOHANNESBURG - If you think that South Africans are under pressure from an increasing repo rate, Zimbabwe has announced new drastic measures to tame inflation.

Zimbabwe has more than doubled its policy rate to 200%.

South Africa's repo rate is 4.75%.

That country's central bank says the increase in its policy rate to 200% from 80% will take effect from 1 July after annual inflation hit almost 192% this month.

The Reserve Bank of Zimbabwe says it notes that the increase in inflation is undermining consumer demand and confidence.

Therefore it says, that if not controlled, it will reverse what it notes as significant economic gains achieved over the past two years.

The banks says to boost the overall situation, it will also outline plans to make the US dollar legal tender in the southern African nation for the next five years.

Finance Minister Mthuli Ncube says the greenback is already used in Zimbabwe, but it will become legal tender to boost market confidence.

The country has experimented with various forms of legal tender, such as bond notes but foreign currencies such as the US dollar and rand have dominated domestic transactions.