CBK Governor warns banks over non-compliance on interest rates
Kenya’s Central Bank Governor, Kamau Thugge has raised the red flag for non-compliance of banks that have failed to conform to the new rate caps citing they will be conducting market inspection among commercial banks to ensure adherence.
Thu, 06 Feb 2025 14:30:30 GMT
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AI Generated Summary
- Banks have been slow to lower interest rates despite a significant reduction in the Central Bank Rate.
- Central Bank Governor emphasizes the need for banks to pass on cost savings to consumers and borrowers to stimulate economic growth.
- Optimism expressed about the stability of the exchange rate and the country's level of reserves in the near future.
Kenya's Central Bank Governor, Kamau Thugge, has issued a stern warning to banks that have failed to adhere to the new rate caps, emphasizing that market inspections will be conducted to ensure compliance. In a recent interview with CNBC Africa, Thugge expressed disappointment in the delayed response from banks to lower interest rates following the reduction in the Central Bank Rate (CBR) by 225 basis points. Thugge highlighted the need for banks to pass on the benefits of reduced costs of mobilizing funds to consumers and borrowers, rather than using it to bolster their profits. The Governor emphasized the importance of aligning lending rates with the risk-based credit pricing model to stimulate economic growth and increase aggregate demand. Thugge also addressed concerns about the impact of tax cuts on disposable income and the sustainability of fiscal policies. However, he remains optimistic about the stability of the exchange rate and the country's level of reserves in the near future.
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