Zimbabwe cuts rates for first time in almost three years after US-Iran truce

…becoming first country’s central bank to globally lower MPR

Zimbabwe’s central bank has become the first in the world to cut interest rates following the interim peace agreement between the United States and Iran that reopened the Strait of Hormuz and triggered a fall in global oil prices.

The Reserve Bank of Zimbabwe reduced its benchmark interest rate by 50 basis points to 30 percent from 35 percent, Governor John Mushayavanhu announced on Monday. Despite the reduction, Zimbabwe still has the highest benchmark interest rate in Africa, although the new rate is the country’s lowest since April 2020.

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The move marks the first change in the Southern nation’s policy rate since the introduction of the Zimbabwe Gold currency, known as ZiG, in April 2024. The ZiG replaced the struggling Zimbabwean dollar and became the country’s sixth attempt to establish a stable local currency since 2009.

According to Bloomberg, the central bank said the decision was driven by improving global conditions, especially the US Iran peace agreement, which has lowered energy costs and strengthened expectations that inflation will continue to slow.

“The MPC expressed optimism that promising signals from the US Iran peace deal, which precipitated a fall in Brent crude oil prices, would sustain the declining trend in prices, thereby supporting the country’s low inflation environment,” Mushayavanhu said.

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Brent crude prices have fallen about 6 percent since the agreement was reached, trading at around 82 dollars per barrel. The Strait of Hormuz previously handled about one fifth of global seaborne oil and liquefied natural gas shipments, as well as one third of global fertilizer exports.

Mushayavanhu said the interest rate reduction should not be viewed as the beginning of a broad easing cycle but as a response to changing inflation conditions.
“The cut does not mark the beginning of a monetary easing cycle at this stage but a realignment of the policy rate to the structural shift in inflation dynamic,” he said.

Zimbabwe’s inflation has fallen sharply from a peak of 95.8 percent in July 2025 to below 5 percent this year. Annual inflation slowed to 4.4 percent in May from 4.8 percent in April.

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Despite disruptions caused by the Middle East conflict, the central bank said Zimbabwe’s economy remained resilient and is expected to grow by five percent in 2026, following an estimated expansion of 8.2 percent in 2025.