Will Interest Rates Adjustment Limit Credit Demand?

(From Mmegi / The Reporter (Botswana) - AAGM)

Byline: Kabo Mokgoabone

The recent upward adjustment in interest rates by Bank of Botswana (BoB) has elicited more debate on whether the increase will really limit households' level of borrowing. BoB governor, Linah Mohohlo said the rates were increased in an effort to curtail skyrocketing inflation.

Most Central Banks, including BoB financial pundits, argue that they use interest rates as a tool to control the level of credit demand.

But, many Batswana still frequent lenders like commercial banks or micro-lenders to get auto loans or personal loans to purchase consumer goods.

It is …