Africa-Press – Kenya. Kenyans are set to continue borrowing at cheaper rates after the Central Bank of Kenya on Tuesday further cut the base-lending rate to 8.75 per cent, the lowest on record.
This is the 10th time in a row the banking regulator is slashing the Central Bank Rate (CBR), the rate at which it lends to other banks, hoping they pass the benefit to borrowers.
A statement from the Monetary Policy Committee (MPC) on Tuesday attributed the cut to stable macroeconomics, with inflation having eased by 10 basis points in January to 4.4 per cent from 4.5 per cent in December.
“Having considered these developments, the committee therefore concluded that there was scope for a further easing of the monetary policy stance by reducing the CBR by 25 basis points,’’ CBK said.
The apex bank says the 0.25 per cent cut from nine per cent in December will augment the previous policy actions aimed at stimulating lending by banks to the private sector.
This is expected to support economic activity while ensuring inflationary expectations remain firmly anchored, and the exchange rate remains stable.
It will closely monitor the impact of these policy decisions as well as developments in the global and domestic economy and stands ready to take further action as necessary in line with its mandate.
To strengthen the effectiveness of the monetary policy implementation framework and enhance monetary policy transmission, the MPC approved a narrowing of the interest rate corridor around the Central Bank Rate (CBR) from the current ±75 basis points to ±50 basis points.
This will support the alignment of the Kenya Shilling Overnight Interbank Average (Kesonia) to the CBR.
The Monetary Policy Committee says it will closely monitor the impact of these policy decisions as well as developments in the global and domestic economy and stands ready to take further action as necessary in line with its mandate.
