Kenya’s central bank sees a surge in lending rates

by Trust Matsilele 0

Kenya’s central bank sees a surge in lending rates

The Central Bank of Kenya’s data indicates that the average lending rate went up by 2.2 per cent to 18.3 percent in December. 

According to the latest review by the energy regulator, the new pump price is expected to be in place up to 14th of March.

Aly-Khan Satchu, chief executive of Rich Management told CNBC Africa that events of last October in the markets had forced banks to reprice loan books.

“The higher rates and wider net interest margins are a consequence of a surge in the T-bill rate at the end of October last year that forced banks to reprice their loan book as they were having struggles with deposits,” said Satchu.

“As October tails off, we should see narrowing of spreads and central banks taking a name and shaming attitude by publishing interest rates like what the Central Bank did last week.”

This is a determination to drive margins lower and this is expected to continue in the next few weeks.

The market is relatively liquid and the overnight lending rates are in single digits hence there are nice yields. The lending rates are a consequence of the spike we saw like October.

He also added that the Kenyan shilling was stable at a time when other currencies are collapsing as a result of intervention from the Central Bank. 

Satchu added that the east Africa powerhouse was poised to see lower fuel prices.

“Lower Fuel Prices and a strong shilling confirm that inflation is not a clear and present danger and interest rates will trend lower,” he added.