Rotich says rate caps only ‘a short-term’ mea­sure

Business Daily (Kenya) - - MONEY & MARKETS - Kevin Mwanza kmwanza@ke.na­tion­media.com Banks have called for re­peal of the law, say­ing caps re­spon­si­ble for slow­down

The law cap­ping in­ter­est rate is only a short-term mea­sure to help the bank­ing sec­tor move to a lower rate regime in fu­ture, Trea­sury sec­re­tary Henry Rotich claimed yes­ter­day.

The caps were pushed through a pop­u­lar amend­ment in Par­lia­ment against the Trea­sury and Cen­tral Bank of Kenya coun­sel.

In­tro­duced slightly over a year ago, they fixed the price of loans at four per­cent­age points above the cen­tral bank rate (now at 10 per cent) and im­posed a min­i­mum de­posit rate of 70 per cent of the bench­mark rate.

“Caps are a short- term mea­sure. They are not sus­tain­able in the long-term,” Mr Rotich told a press brief­ing on Thurs­day. “They have been im­posed now so that we can quickly move to a lower rate econ­omy.”

Banks, through lobby Kenya Bankers As­so­ci­a­tion, have called for a re­peal of the rate law, say­ing it is re­spon­si­ble for a slow­down in credit growth over the last year.

Some lenders have blamed the caps for lower prof­its in the year.

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