Banks increase lending rates on liquidity crunch

Friday, May 09, 2025 | 2300 Views |

Mercury rising: The pressure is increasing on households, from the slowdown in the economy, to banks raising their lending rates
PIC: MORERI SEJAKGOMO

Two commercial banks unilaterally raised their prime lending rates in the past week, marking the first-time banks have uncoupled from the Bank of Botswana interest rate benchmark since the freedom to do so was introduced two years ago.

Absa Bank Botswana, Stanbic Bank Botswana, and BBS Bank raised their lending rates by between 75 and 100 basis points, as the impact of a long-running liquidity crunch in the local capital market came to bear.

Since April 2023, banks have been able to raise their lending rates independently from the central bank’s Monetary Policy Rate (MoPR), as part of interest rate reforms aimed at better transmitting monetary policy.

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