What reduced CBR means for borrowers?

Although the Bank of Uganda (BoU) on August 7 joined other central banks in the advanced economies to cut policy rates, it doesn’t mean that commercial banks are going to lower commercial lending rates soon for the borrowers beginning borrowing at lower interest rates.

This is because the central bank policy rate (CBR) cut comes with time lag since the commercial banks take time to reduce their lending rates even when policy rates have been reduced.

BoU Monetary Policy Committee (MPC) cut the central bank rate by 25 basis points from 10.25 percent to 10.0 percent, expecting a…