The Central Bank of Kenya (CBK) Governor Kamau Thuge has warned banks against high loan interest to clients.
Speaking on Friday, December 6, during a press briefing after CBK’s Monetary Policy Committee (MPC) meeting, Governor Kamau revealed that banks’ failure to lower their lending rates could stagnate economic performance.
The governor revealed having recently held a meeting with bankers over the matter, however, despite reaching a conclusive agreement, there is still no change in the interest rates charged on loans acquired by Kenyans.
“Banks have been sluggish in lowering their lending rates. Two weeks ago I had a meeting with bankers, and I do believe they now understand the reason why they need to start lowering their rates progressively,” Kamau said.
“If they continue on this path, it is a no-win for anyone, it is a no-win for the banks, and the economy with not being able to perform. On the other hand, if they decide to lower the rates, the economy will benefit from more credit and become more active,” he added.
The governor went ahead to dismiss allegations that CBK’s directive to commercial banks was politically instigated. He clarified that the move was informed by the regulator’s decision to cut the base lending rates.
