Borrowers who have loans with the Equity Bank will now pay a maximum interest of 25.89 per cent down from 26.33 per cent. This cut comes after the Central Bank of Kenya’s Monetary Policy Committee (MPC) slashed the Central Bank Rate (CBR) from 12.75 per cent to 12 per cent.
“The reduced interest rate on all new and existing Kenya Shilling-denominated credit facilities will comprise the revised Equity Bank Reference Rate (EBRR) of 17.39 per cent plus a margin, currently capped at a maximum of 8.5 per cent per annum,” Equity Group chief executive officer Dr. James Mwangi said in a statement.
““The reduction in our Equity Bank Reference Rate (EBRR) from 17.83% to 17.39% is in response to the MPC’s decision, which aims to maintain economic stability amid improving inflation trends and favorable economic indicators.”
The new rates came into effect starting on November 18, 2024. They marked the second time in under six months that the bank was slashing rates. The bank had in September 2024 slashed rates from 26.74 per cent to 26.33 per cent.
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The move by Equity Bank comes in the wake of reports that Central Bank of Kenya (CBK) has summoned local bank executives over what it terms as their reluctance to extend benefits of lower rates to borrowers.
According to a report that appeared in a local daily, the CBK is concerned that local banks are quick to cut deposit rates but very slow in cutting interest rates on loans in line with cuts made on the benchmark rate.
The benchmark rate was lowered to 12 per cent during the MPC meeting that was held on October 8, 2024. It had previously stood at 12.75 as from August 6, 2024. Between February and June 2024, the benchmark rate had been maintained at 13 per cent. The level of the CBR is reviewed and announced by the MPC at least every two months.
