The increase would have seen interest rates increase up to 27 percent from the current average of 16 percent owing to the rise of Treasury Bill rates which hit a high of 22 percent on October 15, 2015.
Equity Bank Chief Executive James Mwangi says the underlying macro economics conditions did not justify high interest rates and hence the bank believes that it was a temporary condition.
He lauded the government for its speed in reducing the Treasury Bill rates.
“As we anticipated, the rise in rates was a short term measure but it has been shorter than we had anticipated and hence the withdrawal of interest rates increase notice,” he added.
In the latest auction, the 91-day Treasury Bill stood at 9.6 percent down from 13.73 percent and had previously dropped from 19.47 percent.
The 182-day T-Bill rate fell 421 basis points to 12.28 percent while the 364-day T-Bill rate fell 351 basis points to 13.62 percent from 17.1 percent.
Since rates started creeping up in April, the current rates for both T-Bills are the lowest recorded since the month of August.
“Now that the government has affirmed our belief, we are confirming that we are not increasing interest rates on loans after all. We thank the government for the intervention and for removing the headwinds on the macroeconomic environment hence bringing stability to the financial services sector,” Mwangi added.
A week after the T-Bills rates increase, Equity Bank gave its customers a one month notice which could have effectively increased interest rates on all loans effective November 19, 2015.