The International Monetary Fund yesterday warned that Kenya faces the risk of financial instability in coming years if it does not scrap the interest controls enforced last September. “Although the adverse effects of the controls are manageable in the near term, if maintained, they could potentially pose a risk to financial stability,” IMF deputy managing director and acting chair Tao Zhang said in a statement. “Establishing a formal interest rate corridor remains a priority for strengthening the monetary policy framework,” Zhang said. He said banks were insensitive in charging higher interest loans, which averaged about 18.2 per cent in August. “However, interest rate controls are likely to reduce access to credit, weighing on growth.

Source: The Star January 26, 2017 22:34 UTC