By Tawanda Musarurwa Senior Business Reporter
Zimbabwe’s fiscal and monetary authorities say the removal of the cap on banks’ lending rates will only affect short-term borrowings while long-term borrowers, especially corporates, remain insulated.
The central bank’s interest rate policy plays a key role in the formulation of effective monetary policy market interventions and impact on an economy insofar as interest rates are determinant of the cost of capital.
A fortnight ago, the central bank adjusted the interest rate on its overnight window upwards from the circa 15 percent per annum to 50 percent per annum. This was meant to discourage borrowing for speculative activities on the parallel foreign exchange market, which was driving price volatility. Read more…
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