Accessibility links

Breaking News

Zimbabwe Central Bank Governor Says Inflation to Fall to 50% by December

FILE: Reserve Bank of Zimbabwe Governor John Mangudya

HARARE, Jan 22 (Reuters) - Zimbabwe’s central bank governor said on Wednesday annual inflation was expected to sharply fall to 50% by the end of this year, as the bank left the main lending rate unchanged saying it was working to stabilise the exchange rate and prices.

The government last year suspended publication of annual inflation data until next month, but economic analysts say the figure reached 525% in December.

John Mangudya said that since October month-on-month inflation has been falling and ended the year at 16.55%, near the bank’s target of 15% last month, giving rise to forecasts that it would fall to single-digit levels.

“This trend would see the year-on-year inflation coming down to about 50 percent by December 2020,” Mangudya said in a statement.

He said central bank government subsidies should be financed from the national budget not by the central bank as this would destabilise exchange rates and fuel inflation.

Most economists, however, still expect inflation pressures to remain elevated, pointing to higher food prices as a result of a drought last year and poor rains during the current farming season as well as foreign exchange shortages.

Zimbabwe is in the grips of its worst economic crisis in a decade, marked by soaring prices and shortages of medicines, fuel and electricity, dashing hopes of a quick recovery under President Emmerson Mnangagwa. (Reporting by MacDonald Dzirutwe; Editing by Alison Williams and Jonathan Oatis)