Expectations are high that borrowers will soon see a drop in the cost of credit from commercial banks. This follows a move by the Monetary Policy Committee(MPC) to cut the policy rate from 8.25 percent to 7.25 percent.
While lowering the policy rate is a signal for commercial banks to lower their lending rates, banks have in the past been slow to react to this monetary tool. This is the 3rd straight cut of the Central Bank Rate.
CBK Governor Dr. Patrick Njoroge reassured Kenyans that they have the power to ensure banks comply with the recently announced measures. ” We are not in the Wild West and possess the necessary oversight to ensure compliance,” said Dr. Njoroge.
Following a meeting between the banking industry and the monetary authority, banks waived several transaction fees and indicated willingness to provide a moratorium to distressed borrowers.
He gave assurances that the banking sector provides critical services and would therefore
remain open for business in case of a countrywide lockdown.
” Transmission of CBR to customers takes time and usually takes about two months for the impact to be felt,” said Dr Njoroge.