Banks have over the last week been falling over themselves to reduce their lending rates but only after the Central Bank of Kenya (CBK) threatened to penalise them for failure to pass on the benefits of lower interest rates to their customers. 

The developments mirror the past, where the banks sustained high costs of loans, with some charging as high as 35 and 40 per cent annually but would react whenever the regulator threatened to cap rates legally through an Act of Parliament.