Millions of borrowers are in relief after the Central Bank of Kenya (CBK) announced that it will be retaining the base lending rate.
The maximum cost of loans will remain the same.
According to the Monetary Policy Committee (MPC), the benchmark rate will remain at 10 percent. The committee cited current monetary policy stance, saying it had reduced the threat of money-driven inflation.
Local banks have been slow in lending after the government passed a new law capping the interest rate at 14 percent
“The Committee concluded that the current policy stance remains appropriate. The MPC, therefore, decided to retain the Central Bank Rate (CBR) at 10 per cent in order to continue to anchor inflation expectations,” said CBK governor Dr. Njoroge in a statement.
Njoroge further noted that growth of credit to the private sector fell further to 2.1 per cent over the 12 months to May this year, attributing this in part “to significant repayments in manufacturing, transport and communication, and developments in the trade sector.”
Kenya’s inflation dropped to 9.21 per cent year-on-year in June, from 11.70 per cent a month earlier. The Kenya National Bureau of Statistics partly attributed this to a drop in food prices. Month-on-month inflation stood at minus 1.2 per cent.