Maravi

Increasing interest rates are temporary, says Melu

Increasing interest rates are temporary, says Melu
By Fridah Zinyama
Saturday September 13, 2008 [04:00]

STANDARD Chartered Bank managing director Mizinga Melu has said the increasing interest rates that the country is currently experiencing are temporary. In an interview, Melu said the interest rates were being pushed up by the current high inflation in the country.

"The high interest rates are being fuelled by inflation and we are optimistic that come next year when inflation goes down, interest rates will go down as well," she said.

Melu explained that commodity prices in the country have generally been rising and this has forced most banks to increase their increase rates.

"High fuel prices lead to high transport costs, production costs and this generally pushes everything up," Melu said.

Finance Bank managing director Dick King said reducing bank interest rates based on inflation was not feasible.

King explained that there were a lot of other macro-economic factors to consider apart from inflation when dealing with interest rates in the country.

He explained that bank portfolios were different hence it would be very difficult to use inflation as a basis for reducing interest rates.

"One of the other things to consider is that not all banks compete in the same way," King said. "Therefore, reducing interest rates based on inflation alone would not be feasible."
King said as far as Finance Bank was concerned, they were offering interest rates that people could afford.

"We are a Zambian bank and we offer fair rates. We offer 19 per cent which is all right considering all the economic indicators in the country," said King.

Most banks have increased their lending rates from 17 to 19 per cent citing inflation as a major contribution to the upward adjustment in interest rates.

Labels: INTEREST RATES, MIZINGA MELU, STANCHART

posted by MrK @ 6:39 AM