AFTER LOBBYING THE Central Bank of Barbados for several years, commercial banks have finally got their way – at least partially.
From April 18, the Central Bank will relinquish its control of the minimum rate that commercial banks must pay on deposits of its clients.
The minimum interest rate was also used by the Central Bank as an instrument to influence the lending rates of the five commercial banks.
Several banks, including the most recent entrant First Citizens, had called on the Central Bank to release its control on the savings rate and allow the bankers – guided by competition in the market – to set their own rate.
Many of them complained the rate set by the Central Bank was too high given the falling demand for loans. Interest rates on savings have dropped from 4.5 per cent in 2008 to 2.5 per cent today.
