The Seychelles Central Bank said it was satisfied with the lowering of interest rates on local banks’ loans and did not consider it necessary to take action for non-compliance.
Local banks were asked to cut their interest rates in July, and the central bank had given them until October 1 to do so.
“What we’ve seen since late September, October, and now early November, we’re also seeing a fall in mortgage and corporate interest rates,” said CBS Governor Caroline Abel at a news conference Tuesday.
Home loan interest rates fell from an average of 7.6 percent at the end of September to 6.7 percent at the end of October. The lowest home loan interest rate is 5.5 percent at Nouvobanq, while the highest at the Bank of Ceylon is 8 percent.
For corporate loans that require collateral, it has fallen from an average of 11.3 percent to 10.6 percent. The lowest is 8 percent and the highest is 12.5 percent. The bank with the lowest interest rate is the Bank of Baroda and Al Salam Bank of Seychelles, both at 8 percent; Seychelles Credit Union and ABSA Bank have the highest interest rate at 12.50 percent.
“What we expect in the next few months, when we are at the door in 2022, is that we see an improvement in falling interest rates again and again,” said Abel.
She added that “a lot of banks approached us when we asked them to cut their interest rate and I am happy to say that some have pledged to keep lowering it in the coming months.”
Eight commercial banks are currently operating in the Seychelles, an archipelago in the western Indian Ocean. These are Absa Bank Seychelles, MCB Seychelles, Bank of Baroda, Nouvobanq, Seychelles Commercial Bank, Al Salam Bank Seychelles and the Bank of Ceylon. The eighth bank, Al Habib, is expected to cease operations by November 31st.
Abel also spoke of the Seychelles’ high inflation rate and that the year-on-year inflation rate is currently 9.99 percent, with a 12-month average of 8.85 percent.
“Inflation is still high in Seychelles despite the decline in exchange rates, and this has been heavily influenced by external factors such as rising food and energy prices around the world,” Abel said.
Meanwhile, during the press conference, the governor of CBS also spoke of the uncertainty that still surrounds the country’s economy due to the unpredictability of the COVID-19 pandemic.
“Despite our improving economic situation, we still need to be aware of what we are doing … back to normal,” she said.