Muyela Roberto is a business journalist at TUKO.co.ke with over 9 years of experience in the digital media, offering deep insights into Kenyan and global economic trends.....CLICK HERE TO READ THE FULL ARTICLE>>>
It is a great sigh of relief for borrowers in Kenya after the Central Bank of Kenya (CBK) lowered the benchmark lending rate from 13% to 12.75%.
The move is expected to ease the cost of credit in Kenya and came as a hallmark since the regulator had not effected any cuts on the key rate over the past four years in a bid to cushion the country against inflation risks.
This led to expensive loans in the market, with the lowest lending rate for facilities such as personal loans capped at at least 21%. The high CBR also led to a spike in non-performing loans.
The MPC noted that its previous measures have lowered overall inflation to below the midpoint of the target range, stabilised the exchange rate, and anchored inflationary expectations.
The rate has returned to 12.75% where it was in February 2024 when the Kenyan shilling was experiencing a free fall against the US dollar, which was at that time selling for KSh 160.
“The MPC concluded that there was scope for a gradual easing of the monetary policy stance while ensuring continued exchange rate stability. Therefore, the committee decided to lower the Central Bank Rate (CBR) to 12.75%,” said CBK governor Kamau Thugge after the Monetary Policy Committee Meeting.
“They will most likely maintain their current rates and adopt a wait and see approach,” the source said. Thugge said the MPC foresaw a strengthening of the Kenya shilling against the dollar, buoyed by increased exports.
He added that the foreign reserves, which currently stand at KSh 945 billion, will provide an additional buffer for the next four months.
“They continue to provide adequate cover and a buffer against any short-term shocks in the foreign exchange market,” he stated....CONTINUE READING>>
