The monetary policy committee of Democratic Republic of Congo’s central bank more than doubled its benchmark interest rate from 11% to 25% in a move to halt the weakening of the country’s currency.
(Bloomberg) — The monetary policy committee of Democratic Republic of Congo’s central bank more than doubled its benchmark interest rate from 11% to 25% in a move to halt the weakening of the country’s currency.
The Congolese franc has lost about 21% of its value compared to the dollar since the beginning of the year, according to data compiled by Bloomberg.
“In view of the persistence of internal and external inflationary pressures, the MPC again agreed to tighten monetary policy,” the bank said in a statement published on its website Wednesday. The MPC raised its key rate 200 basis points in June.
Despite repeated interventions by the central bank and government this year, the franc’s value continues to slide as security and pre-election spending, coupled with lower-than-expected revenues, put pressure on the exchange rate with the dollar, according to the International Monetary Fund.
Inflation increased 24.5% in the 12 months through July 22, according to the bank’s website.
Last month the government also announced it would reduce its cash expenditures and encourage tax payments in francs instead of US dollars in an effort to halt the franc’s decline.
While the pace of the currency’s devaluation slowed in the last half of July, uncertainty regarding the impact of ongoing conflicts in eastern Congo and the war in Ukraine spurred the MPC to take further action, the bank said in a statement.
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