Kenyans to pay less for loans
By Ruth Mutegi
Kenyan borrowers should expect lower interest rates following Central Bank of Kenya’s move to introduce the Kenya Bank Reference Rate, also known as KBRR rate.
Policymakers at the Central Bank set the inaugural KBRR at 9.13 percent, with commercial banks expected to use this new rate in tabulation of interest rates to charge borrowers.
The standard rate which CBK set at 9.13% effective from Tuesday would be in use for the next six months.
This means that banks will not raise their interest rates without considering the KBRR rate issued by CBK as has been the norm, bringing hope that maybe there could no arbitrary increase in lending rates.
This is because each borrower would be evaluated based on his or her risk and be given an interest rate based on it.
The only set back to this hope would perhaps be that even with the KBRR, banks would still add their premium on to the figure, bringing the rate either high or at a rate that would attract more borrowers.
KBBR is based on averages of the monetary policy rate and the 91-day Treasury bill yield over six months. During the MPC meeting, policymakers also retained the base lending rate at 8.5% for the 7th time.
The rate has been in place over the last 14 months.
The Monetary Policy Committee (MPC) says it will monitor key macroeconomic aggregates and any emergent risks from external and domestic economies that may impact on price stability.