Zambian financial institutions were reluctant to reduce interest rates rapidly because of high operational and other overhead costs, Times of Zambia quoted the Bankers Association of Zambia (BAZ) on Thursday.

BAZ chairwoman Sherry Thole was quoted as saying that the costs of bank services in Zambia was still very high. Although the institutions were committed to rate reduction, they were seeking ways to deal with the ever-increasing operational costs.

Zambian central bank has repeatedly urged the banks to cut their interest rates in line with the appreciation of kwacha and reduced inflation. The rates have dropped from 40 percent to 23 percent over the past six months.

However, Thole said she was optimistic that the costs would fall in a due course to enable the financial institutions to take appropriate reciprocal measures. She also forecast a further reduction in interest rates to about 10 percent by the end of this year.

Source: Xinhua