Lending Rates To Drop â€" BOU
Mar 18, 2004
THE Bank of Uganda (BOU) expects commercial bank lending rates to decline in line with falling Treasury bill (TB) yields, which are at their lowest in more than a year, a senior official said on Thursday.<br>
By Steven Odeu
THE Bank of Uganda (BOU) expects commercial bank lending rates to decline in line with falling Treasury bill (TB) yields, which are at their lowest in more than a year, a senior official said on Thursday.
The annual yield on the benchmark 91-day TB slid to a monthly average of 12.55% in February from 18.36% in January.
Commercial banks use the yield on 91-day TB to determine interest rates of their loans.
“We anticipate that since market interest rates have started coming down, commercial banks should be adjusting their lending rates downwards,†BOU’s Principle Economist Rachael Sebude told a news conference. Commercial banks prime lending rates are between 18% and 23%.
“Most banks are bringing down their lending rates in response to the market interest rates. I expect a general decline in lending rates,†Uganda Bankers' Association president Samwiri Njuki told The New Vision yesterday.
Yields in all the TB tenures have been sliding in recent months as the BOU reduces its borrowing through the TBs.
Total offers were reduced to sh70b in February from sh100b in January.
TB yields discount rates declined further from end of levels of 18.36%, 18.71%, 17.85% and 16.85% to 12.55%, 13.94, 13.73% and 13.70% for the 91, 182, 273 and the 364-days TB in Feb.
bills at the end of February.
The total bids at February's two bi-monthly auctions increased to sh217.6b from January's sh176.2b.
Ends
THE Bank of Uganda (BOU) expects commercial bank lending rates to decline in line with falling Treasury bill (TB) yields, which are at their lowest in more than a year, a senior official said on Thursday.
The annual yield on the benchmark 91-day TB slid to a monthly average of 12.55% in February from 18.36% in January.
Commercial banks use the yield on 91-day TB to determine interest rates of their loans.
“We anticipate that since market interest rates have started coming down, commercial banks should be adjusting their lending rates downwards,†BOU’s Principle Economist Rachael Sebude told a news conference. Commercial banks prime lending rates are between 18% and 23%.
“Most banks are bringing down their lending rates in response to the market interest rates. I expect a general decline in lending rates,†Uganda Bankers' Association president Samwiri Njuki told The New Vision yesterday.
Yields in all the TB tenures have been sliding in recent months as the BOU reduces its borrowing through the TBs.
Total offers were reduced to sh70b in February from sh100b in January.
TB yields discount rates declined further from end of levels of 18.36%, 18.71%, 17.85% and 16.85% to 12.55%, 13.94, 13.73% and 13.70% for the 91, 182, 273 and the 364-days TB in Feb.
bills at the end of February.
The total bids at February's two bi-monthly auctions increased to sh217.6b from January's sh176.2b.
Ends