THE Reserve Bank of Zimbabwe this week cut its benchmark interest rate by 20 percent to 130 percent, amid concerns that a Zimdollar credit squeeze was threatening stability.
It comes as the Zimbabwe National Chamber of Commerce (Zncc) had raised the alarm, saying high interest rates were keeping lending in the domestic unit low, with the central bank announcing recently that foreign currency-denominated loans constituted close to 95 percent of the banking sector’s book.
“The Monetary Policy Committee (MPC) noted that the negative impact of emerging global risks, including subdued global growth emanating from geo-economic fragmentation and the effects of tight monetary policy, high interest rates, credit squeeze and low international commodity prices, could pose significant risks to the current stability in the domestic economy,” reserve bank governor John Mangudya said in a statement this Tuesday.
Reserve Bank of Zimbabwe governor, John Mangudya
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