High inflation ‘to negate’ interest rate adjustment

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AN EXPECTED interest rate adjustment on short-term tenors in Zimbabwe is unlikely to have the desired effect of curbing speculative borrowing because of the country’s high inflation, an analyst has said.
As part of a slew of measures meant to stabilise the Zimbabwe dollar, minister of Finance, Mthuli Ncube, last week announced that interest rates for tenors of up to six months are to be raised sharply to reflect future inflation expectations, while long-term rates are to remain lower.
This the Treasury chief said would squeeze out speculative demand for both ZWL and US dollar.