It has been announced this Monday by the Governor of BNR, John Rwangombwa during the presentation of monetary policy.
Rwangombwa explained that the reduction is meant to support banks’ lending to the private sector to increase development activities.
He, however, noted that it doesn’t mean that changes in interest rates will be affected immediately because banks have other requirements in the process of delivering loans.
“We want to keep supporting banks to increase lending to private investors to scale up national economy and the pace of market prices that were very low,” he said.
Rwangombwa said the wish is to accelerate the pace for market price from 1% of March 2019 to 3% at the end of this year.
BNR announced that lending from banks increased by 24.9 %. Loans to private investors increased by 16.2 % compared to 7.3 % of a similar quarter in 2018.
Rwangombwa said there is evidence of national economic growth by12.2% in the first three months of 2019.
He said that reducing the lending rate will enable banks to match established standards and ease private investors’ access to credits to boost economic growth.
“It however takes time. We don’t assume that they are reducing the interest rate tomorrow because we did it today. It takes a process because they get money from clients,” he added.
It has been over a year since BNR reduced the base lending rate from 6% to 5.5%.
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