Ugandan lenders pledged to reduce the cost of borrowing after the central bank threatened to set pricing in line with the lowest benchmark interest rate recorded.
Commercial banks “heeded the governor's call” and will review interest rates downwards within 30 days, the Uganda Bankers' Association said in a statement on its website.
Bank of Uganda said it considered determining rates if lenders didn't reduce loan prices to reflect the main lending rate, New Vision newspaper reported July 10, citing a letter from Governor Emmanuel Tumusiime-Mutebile to the banks. The central bank sees lower borrowing costs helping families and businesses to deal with the economic stress caused by the coronavirus outbreak.
The benchmark rate was cut by 100 basis points to 7% last month, the lowest since the central bank introduced the policy rate in 2011 at 13%. Commercial banks' lending rates, however, have remained above 17.7% since April.
READ: Uganda Cuts Key Interest Rate to New Low as Inflation Benign
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