Bank of Uganda threatens cap on bank interest rates

The Central Bank of Uganda has threatened to cap lending rates should commercial banks fail to quickly ease their lending interest rates consistent with Bank of Uganda’s ease in monetary policy.

Governor of the Central Bank, Emmanuel Tumusiime Mutebile says the reluctance of banks to bring down their rates may force Bank of Uganda to take redress as provided for in Section 39 (1) (d) of the Bank of Uganda Act 2000.

The Section states that “the bank may in consultation with the Minister (of Finance), by statutory instrument prescribe the maximum or minimum rates of interest and other charges which in the transaction of their business financial institutions may pay on any type of deposit or other liability and impose or credit extended in any form”.

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