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Kenya's central bank lowers benchmark lending rate

Xinhua, September 21, 2016 Adjust font size:

Kenya's central bank (CBK) on Tuesday reduced the benchmark lending rate or the Central Bank Rate by 50 basis points to 10 percent, following the interest rate caps.

The CBK's Monetary Policy Committee said the reduction was expected to ease inflation, which it said was expected to decline within a short time.

"The committee observed that the demand pressures on inflation are moderate and inflation is expected to decline in the short term, but the committee remains concerned about the persistent slowdown in private sector growth," CBK governor Patrick Njoroge said in a statement.

Njoroge said the CBK will continue to monitor developments in the domestic and international economies and will use the instruments at its disposal to maintain overall price and financial sector stability.

The CBK says continued decline in the growth of private sector credit since July poses a risk to economic growth.

However, a survey conducted by the CBK Monetary Policy Committee earlier this month shows the private sector remains optimistic for an improved businesses environment in 2016.

This, the survey said, will be backed by macroeconomic stability, public investment in infrastructure, improved agricultural performance and a further recovery in tourism.

The CBK said it is closely monitoring the impact of the new law, which caps interest rates by commercial banks, on monetary policy and on the overall economy.

"The CBK will continue to put in place measures to sustainably reduce the cost of credit and improve liquidity management," Njoroge said. Endit