PRESIDENT RUTO SENDS WARNING TO BANKS OVER INTEREST RATES

President William Ruto has called out the banking sector over high interest rates, questioning why lending costs remain steep despite a sharp drop in treasury bills. Speaking during a roundtable talk with the Private sector in Nairobi on Wednesday, August 6, Ruto urged banks to make credit more accessible and responsive to economic realities.
He warned that financial institutions must balance the interests of shareholders with the needs of borrowers. “Treasury bill rates have come down from 16% to 8% just last week. When are you going to bring down interest rates? I mean, honestly—when are you going to bring down the interest rates to reflect that drop? Ruto posed. “I have taken more responsibility to scale down government borrowing, which is why treasury bill rates have come down.”
The head of State also expressed concern over the slow pace at which interest rates are coming down despite a significant drop in the Central Bank Rate (CBR).
“Let me say this on behalf of everyone with a bank loan—including myself,” Ruto said. “The CBR currently stands at 9.75%, yet your average lending rates are still at 15.29.” Ruto Pressures Banks to Lower Interest Rates, Cites Drop in T-Bills In response, a Kenya Bankers Association (KBA) representative acknowledged that concerns about the slow reduction of lending rates are valid.
He explained that this is precisely why banks, together with the Central Bank, are engaging in discussions on a unified pricing framework—largely in response to the issues raised. According to him, under the current arrangement, where different banks use varying pricing models, the transmission of rate cuts has been slow.
“Banks have indeed been reducing rates in line with treasury bills, but not as quickly as expected,” he said.
“Now, with this new unified framework, the expectation is that when the Central Bank adjusts the CBR, borrowers will see an immediate reflection of that adjustment in their loan rates. That is the primary objective of this framework.”