Oct 02, 2007 (LBO) – Zimbabwe has hiked overnight discount rate by 15,000 basis points to 800 percent while the rate at the unsecured last resort window has been upped to 850 percent, a market day after Sri Lanka froze policy rates. “These levels will be reviewed regularly without prior warning,” Zimbabwe’s central bank governor Gideon Gono said in a monetary policy statement that was delayed by three months.
“It should be noted that as a Central Bank, we encourage banking institutions to actively engage each other through a flourishing interbank market, so as to avoid resorting to the punitive overnight accommodation rate.”
Zimbabwe’s action on October 01, came just a market day after Sri Lanka failed to raise policy rates despite inflation rising in four out of five past months.
The bank told commercial banks not to borrow “perpetually” from the window.
“The accommodation rates should, therefore, be seen as policy rates that show the Central Bank’s unwillingness to be injecting inflationary liquidity into the market,” Gono said.
“This is despite our continued support to productive sectors of the economy through tailor-made facilities.”
The bank said it was providin