By Agencies

Zimbabwe’s central bank reduced its interest rate for a second time in a row, bucking a global trend toward keeping borrowing costs higher for longer as the US-Iran stand-off keeps energy prices elevated.

The monetary policy committee lowered the benchmark interest rate to 27.5% from 30% “in view of the continued benign inflation environment and the need to support the economy’s strong growth prospects,” Governor John Mushayavanhu said in a statement on Monday.

“The MPC has embarked on a gradual path of monetary policy normalisation against the backdrop of entrenched macroeconomic stability and better-anchored inflation expectations,” he said.

Annual inflation quickened to 3.7% this month from 2.9% in August due to higher international oil prices. It is expected to remain in single digits at below 7% by the end of 2026, supported by prudent money supply management, the governor said.

Reserve money has been contained within the targets agreed between the Reserve Bank and the International Monetary Fund under Zimbabwe’s ongoing 10-month IMF staff-monitored program, he added.

The cut is the second since the central bank reset the policy rate in April 2024 after introducing a new currency.

The ZiG, short for Zimbabwe Gold, replaced the foundering Zimbabwean dollar and is the southern African’s nation’s sixth attempt at creating a functioning local currency since 2009.

Zimbabwe joins a handful of central banks such as Nigeria and Angola in lowering borrowing costs since US-Iran hostilities flared up in late August, causing oil prices to surge to more than $100 a barrel.

The economy is still expected to grow 5% in 2026, supported by the mining and agriculture sectors, Mushayavanhu said.