The Central Bank of Kenya has cut the base lending rate (CBR) by 50 basis points, effectively reducing the cost of loans from 14.5 per cent to 14 per cent.
The decision, made during the first monetary policy committee (MPC) meeting held since the capping of interest rates, means the base rate applicable in the pricing of loans now stands at 10 per cent from 10.5 per cent, effectively capping lending rates at 14 per cent.
The MPC, which was meeting for the first time after the enactment of the Banking Act Amendment Bill, 2015, said it had decided to lower the CBR from 10.5 to 10 per cent since the demand pressures on inflation are moderate and expected to decline in the short-term. The CBR is the reference rate for pricing loans under the new law. The MPC meets every two months to determine country’s fiscal policy.
“The committee remains concerned about the persistent slowdown in private sector credit growth. The MPC therefore decided to lower the CBR by 50 basis points to 10 per cent,” CBK governor Patrick Njoroge, who also chairs the committee, said in a statement.
