Kenyan banks are quickly reducing lending rates following a directive from the Central Bank of Kenya (CBK), which has threatened financial institutions with heavy fines for failing to comply. The CBK aims to ease the cost of credit for businesses and households by ensuring that banks pass on the benefits of recent monetary policy adjustments.
Leading banks, including KCB Group, Equity Group, Cooperative Bank, I&M, and DTB, have already lowered interest rates by one to four percentage points. Equity Bank stands out as the only major lender to have consistently reduced rates over the past six months. The CBK has intensified surveillance and inspections to ensure compliance, warning that banks slow to act will face financial penalties.
Despite three successive central bank rate cuts, lending rates remain high, reaching an eight-year peak of 17.22%, which has slowed private sector credit growth. The CBK Governor has urged banks to lower rates to prevent economic stagnation, emphasizing that failure to act will harm both banks and the broader economy.
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