Commercial banks were hoping to hear the good news of a lowered policy rate at the first meeting of the Monetary Policy Committee (MPC) meeting which took place days ago.

A press statement has revealed a new development in the borrowing rate, slashed from 16% to 14.5%. According to the report, The review follows significant improvement in macroeconomic outlook, operations of the interbank market and the liquidity levels in the banking system.

The above development lead to reviewing the Lombard Rate also, from 200 basis points to 40 basis points above the Policy rate. Liquidity Reserve Requirements have lowered as follows; 250 basis points from 7.5% to 5.0% on local currency deposits; and by 375 basis points from 7.5% to 3.75% on foreign currency deposits.

MPC also announced the creation of further room for LRR downward adjustment by resolving to incentivise commercial banks that invest in designated sectors and instruments, in which will be detailed arrangements will be announced in due course.

With commercial banks celebrating the 16% decrease from 24% in 2017, the 14.5% lowered borrowing rate is expected to lower interbank borrowing rate in the next Financial Development report.