The Central Bank of Kenya (CBK) has reduced its benchmark interest rate from 10% to 9.75% in an effort to encourage more lending to the private sector.
Governor Kamau Thugge, who led the Monetary Policy Committee (MPC) meeting in Nairobi, explained that there is still room for loosening monetary policy further. The goal is to build on earlier efforts aimed at increasing commercial bank loans to private businesses and stimulating economic growth, all while keeping inflation under control.
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“Lending rates in the local market have continued to fall, and credit to the private sector has shown modest improvement,” Thugge noted in a statement.
The MPC also observed that global central banks have been cutting interest rates as well.
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Thugge added that inflation is expected to stay below the central 5% target in the short term.
The CBK emphasized that it will keep a close watch on the effects of this rate cut and both global and domestic economic trends, ready to take additional steps if needed to fulfill its responsibilities.
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