The Banksters will not reduce lending rates because of the following:-

1. Liquidity is still tight -CBK still engaged in OMO via Repo's... etc...tightening the money markets in the process thus T-Bills have been rising and the interbank rate is still high...pushing the cost of funds for banksters...

2. Protect margins-Faced with low credit uptake, reduced spreads (high cost of funds) and shrinking loan books the Banksters have no option but to keep lending rates where they're to protect margins and their super normal profits.

Conclusions

The rate cut will have no impact on the money markets...since CBK is still maintaining its tight monetary stance as stated in 1.

Now let's see which Banksters will sacrifice margins by reducing lending rates in a bid to grow their loan books, my crystal ball tells me KCB or BBK might!

KCB-Loan book shrunk in Q1 2012

BBK-Loan book has been stagnant for some time...they need to start lending.

Also think Stanchart and BBK will lead the way in reducing their rates. Member and KCB will continue with their high rates and there will jus give some smart talk on why they need to maintain the high rates. unfortunately th common mwananchi will find it better to borrow at Eqty wit high rates n avoid other banks (read Barclays) which has lower rates; av neva understood this.

Don't be harsh to those who Barclays and Stanchart don't/cant welcome to their lobbies because they smell of sweat, cow/chicken poop and they who wear muddy gumboots

Good stuff in there answering enough Qs

They soon will. KCB might follow BBK.