Interest rates to remain high

Despite the monthly reduction in the Central Bank Rate the commercial bank interest rates are still likely to remain high.

Currently commercial banks charge an average interest rate of 24%, yet the bank of Uganda has lowered the CBR to 13% down from 14% in September.

According to Dr. Adam Mugume the director research at the central bank, individual commercial banks are not likely to lower their interest rates because none performing loans are still at their pick.

He explains that non-performing loans as a ratio of gross loans currently stand at 8% and it has been growing since the beginning of this year.

He adds that unless those who acquired loans from these banks clear their debts, banks are likely to hold on to the current interest rate to bridge that gap.