Three more commercial banks have raised their prime lending rates in response to the recent increase in Bank of Uganda's benchmark rate or CBR.
The central bank raised the CBR from 11 to 12 per cent for April 2015. The CBR is the benchmark inter-bank lending rate and determines onward lending by commercial banks.
Stanbic bank, Uganda's biggest commercial bank, on Tuesday raised its prime lending rate from 21 per cent to 22 per cent. In a statement, Stanbic said the new rate, which comes into force on May, 20, 2015, will affect both existing and new borrowers. For existing borrowers, it means they will repay more money to the bank over and above the interest rate for which they had signed.
ABC Capital and Diamond Trust bank have also raised their prime lending rate from 22 to 23 per cent effective May 20, 2015. This brings to four the number of commercial banks that have increased their prime lending rates ever since Bank of Uganda made the changes on April, 8, 2015. NC bank had earlier raised its rate from 21.5 to 22.5 per cent per annum.
While announcing the new CBR for April 2015, Bank of Uganda Governor Emmanuel Tumusiime-Mutebile said forecasts showed volatilities and a high likelihood of increases in core inflation in the medium term.
(c) 2015 Observer Media Ltd. All rights reserved. Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers