Equity Bank Kenya lowers base lending rate to 14.39 pc following Central Bank policy shift
Equity Bank Kenya Limited reduces its base lending rate to 14.39 percent on all Kenya Shilling-denominated credit facilities, becoming the latest lender to adjust borrowing costs following recent monetary policy changes by the Central Bank of Kenya (CBK).
The revised rate, known as the Equity Bank Reference Rate (EBRR), will be set at 14.39 percent plus a margin based on specific customer risk profiles. According to the bank, new borrowers will benefit from the reduced rates immediately, while existing borrowers will experience the changes starting March 1, 2025.
This move positions Equity Bank alongside other major lenders such as Cooperative Bank of Kenya (14.5 percent) and KCB Kenya (14.6 pc), both of which announced rate reductions earlier this week. The trend reflects a broader industry response to the CBK’s recent decision to ease monetary policy amid economic pressures.
The rate adjustments come after the Monetary Policy Committee (MPC) of the CBK lowered the Central Bank Rate (CBR) by 50 basis points, bringing it down to 10.75 percent from 11.25 percent. Additionally, the Cash Reserve Ratio (CRR) was cut by 100 basis points, reducing it from 4.25 percent to 3.25 percent.
These policy shifts aim to stimulate credit growth and economic activity, particularly in the face of rising inflation and sluggish private sector lending experienced in recent months. By lowering the cost of borrowing, the CBK hopes to encourage investment and consumer spending across various sectors of the economy.
Speaking on the development, Moses Nyabanda, Managing Director of Equity Bank (Kenya) Limited, emphasized the bank’s dedication to supporting individuals and businesses during challenging economic times.
“We understand the financial pressures facing Kenyans today, and we’re committed to doing our part to ease that burden. This rate cut is about more than just lower interest rates; it’s about opening doors for Kenyans to invest in their businesses, support their families, and their livelihoods,” Nyabanda said.
The 300 basis points (3 pc) reduction will apply across a wide range of the bank’s credit products, benefiting small businesses, corporate clients, and individual borrowers alike. This move is part of Equity Bank’s broader strategy to make credit more accessible and affordable, particularly for sectors critical to Kenya’s economic growth.
Financial analysts suggest that the reduction in lending rates across major banks could spur economic growth by improving credit uptake, especially in key sectors like agriculture, manufacturing, and trade. However, some caution that the effectiveness of these measures will depend on the broader economic environment, including inflation trends and fiscal policies.
The banking sector’s quick response to the CBK’s policy adjustments signals increased competition among lenders to attract and retain customers through favorable credit terms. As more banks follow suit, borrowers are expected to have greater flexibility and options in accessing credit at more competitive rates.
