Congo's central bank makes huge rate hike to 18.5 per cent

The central bank of Democratic Republic of Congo has raised the main interest rate to 18.5% from 7.5 per cent, central bank official Plante Kibadhi said on Saturday.

The regulator had lowered the rate from 9 per cent in March in order to cushion the economy from the impact of the coronavirus crisis, following similar actions by African central banks as the virus spread across the continent.

The latest rate hike was carried out to re-anchor inflation expectations, the International Monetary Fund said.

Year-on-year inflation in Congo stood at over 14 per cent as of end-July, around 10 percentage points higher than at the same point last year, according to central bank figures.

The central bank has previously said it expects the economy to contract 2.4 per cent this year compared with growth of over 4 per cent in 2019 partly due to coronavirus-linked disruptions to mining, which accounts for a third of national output.

The pandemic has also dampened global demand for metals and other raw materials.