Uganda: Commercial Lending Rates to Keep Falling – Bankers

Apr 28, 2017 | The Monitor; All Africa

Uganda Bankers Association (UBA) is optimistic that rates will continue declining because they are responding to monetary policy directions of the Central Bank.

Kampala - Although the pace at which commercial lending rates are falling is slower than public expectation, Uganda Bankers Association (UBA) is optimistic that rates will continue declining because they are responding to monetary policy directions of the Central Bank. Interest rate is basically the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Lower interest rates make it cheap for the general public to borrow. This encourages spending and investment and it leads to higher aggregate demand in the economy and the result is higher economic growth. In an interview with Daily Monitor on Wednesday, the chairperson of UBA, who is also the managing director of Centenary Bank, Mr Fabian Kasi, said: "We are optimistic that lending rates will come down further. Banks have been reducing their rates since November last year. There are some banks whose prime lending rate at the moment is at 18 and 19 per cent." Bank of Uganda (BoU) has sustained reduction in its policy rate since April last year but the pace at which the commercial banks have been lowering their lending rate has been so slow. Read more on All Africa. Source: All Africa