NAIROBI,Kenya,Jul 6 – Barclays Bank of Kenya became the first lender off the blocks on Friday to announce a drop in its base lending rate by 1.5 percent margin from 22.5 percent to 21 percent effective.
The bank said the new rate, effective August 1, was in line with the Thursday decision by the Central Bank’s Monetary Policy Committee to lower its benchmark rate from 18 to 16.5 percent, citing a drop in inflation and a successful policy stance.
Regional Managing Director, Adan Mohamed expressed hope that all stakeholders in the sector would lower their rates, to allow more Kenyans to access credit.
“Given the prevailing economic conditions, Barclays Bank of Kenya supports the decision reached by the MPC which is in the best interest of our customers and the Kenyan economy,” said Mohamed.
The step by the bank comes even as Treasury Permanent Secretary Joseph Kinyua said real gains for borrowers would be seen once inflation is reduced to a single digit figure.
“There is still need for us to remain vigilant to ensure inflation does not again start creeping up.What is important for Kenyans to bear in mind is that unless inflation is conqured to single digit level,the interest rates will still remain high in the norminal term,” said Kinyua.
Kinyua said there is need to focus on other factors that have led to higher rates, especially the cost of doing business.
He also noted that non-performing loans had also become a big challenge to many banks, with related cases taking too long in courts.
“We would want to see that within 18 months we hit five percent and remain at that level, so that we can give confidence to the banking sector that they can bring the interest rate closer to what would be seen as genuine, “he added.
Overall month-on-month inflation has declined from 12.22 percent in May to 10.05 percent in June mainly arising from a reduction in food and fuel prices.
The non-food-non-fuel inflation also declined from 10.27 percent in May 2012 to 9.31 percent in June 2012.”