Advertisement Join Conversation
Business

Banks yet to react to policy rate cut

Advertisement
Lauryn Nyasulu

Almost three weeks after the Reserve Bank of Malawi (RBM) announced a reduction in policy rate— the rate at which commercial banks borrow from the central bank as lender of last resort—commercial banks in the country are yet to respond.

At the end of the latest Monitory Policy Committee meeting, RBM announced slash to the policy rate by about 150 basis points from 13.5 percent to 12 percent.

But as of Tuesday, at most all commercial banks were yet to reciprocate the central bank’s decision which was aimed at cushioning local borrowers when accessing loans from commercial banks and other financial institutions.

Advertisement

But Bankers Association of Malawi (Bam) Chief Executive Officer Lyness Nkungula said banks were still in talks with RBM as most of them already set their November reference rate at 13.6 percent.

Reacting, Economics Association of Malawi President Lauryn Nyasulu said she expected commercial banks to respond to the rate cut by now.

“When commercial banks are setting interest rates, they are benchmarked on the policy rate because they make reference to it and add a certain percentage so the moment the policy rate is reduced, the expectation is that commercial banks should respond,” she said.

Advertisement

This was echoed by the Dean of Commerce at The Polytechnic, Betchani Tchelani, who wondered if the banks would have delayed if the policy rate was revised upwards.

“Of course they are profit-oriented entities but we are still expecting that they should respond to this reduction so that it benefits their customers,” he said.

Advertisement
Tags
Show More
Advertisement

Related Articles

Back to top button
Close
Close

Adblock Detected

Please consider supporting us by disabling your ad blocker