Interest rates hike to discourage speculation

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THE Reserve Bank of Zimbabwe’s (RBZ) decision to hike interest rates overnight window to 50 percent per annum from 15 percent will discourage speculative borrowing, an investment research firm has said.
“The increase in the overnight interest rates will likely make monetary assets more attractive relative to alternative asset classes in the short term. The attendant increase in borrowing rates will also discourage borrowing for speculative purposes. The downside however will reflect in an increase in non-performing loans in the banking sector,” said MMC Capital in a research note.