The Reserve Bank of Zimbabwe kept unchanged its overnight lending rate at 35% during its January meeting, amid signs that inflation is beginning to stabilize. Policymakers noted that monthly inflation has been on a downward trajectory since October and ended 2019 at 16.55%, near the bank's target of 15%; and it is expected to continue decelerating before falling to single-digit levels in the first quarter of this year. Accordingly, the annual inflation is seen falling to about 50% by December 2020. The bank also defended that government subsidies, such as the gold incentive, should be financed from the national budget not by the central bank, as that would destabilize exchange rates and ramp up inflation. Finally, it was recognized the need to gradually build up gold and foreign currency reserves to boost confidence in the domestic currency as well as strengthen investor sentiment. Interest Rate in Zimbabwe averaged 37.92 percent from 2019 until 2020, reaching an all time high of 70 percent in September of 2019 and a record low of 15 percent in March of 2019.
Interest Rate in Zimbabwe is expected to be 35.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate Interest Rate in Zimbabwe to stand at 35.00 in 12 months time. In the long-term, the Zimbabwe Interest Rate is projected to trend around 25.00 percent in 2020, according to our econometric models.