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1. Profit margins of banks.
Banks will tend to increase the interest rates so as to widen their profit margins as a reaction to losses that they may have made.
2.Foreign interest rates.
In case there is a rise in foreign interest rates there will be a stimulation to increase the interest rates by domestic banks.
3. Inflation.
This is the general increase in price levels. When inflation is high ,banks will increase the interest rates for borrowing to cover up the increased inflation. When the inflation goes down the interest will tend to be lowratesDemand for cash.
Due to the growth of economy people may demand for more money in cash for investment and transaction. Due to high demand for money the banks will increase the interest rates for borrowing loans and this will check the excess demand for money.
5. Government policy.
Via the central bank the government can come up with a law at which all banks will be charging their interest rates. For example, again Kenya the maximum interest rates to be charged by all banks is 14%.
6. Uncertainty.
When banks speculates that there would be some economic recession they will tend to increase the interest rates now since during recession the demand for money can be low hence very few people borrow the money. And if they speculate that there will be boom after sometime they may have low interest rates
Jonmhumble answered the question on October 20, 2017 at 12:51
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