•The MPC Private Sector Market Perception Survey conducted in January 2020 indicates inflation expectations remain well anchored, mainly due to expected lower food and electricity prices.
•The Committee will closely monitor the impact of this change to its policy stance. CBK governor Patrick Njoroge at a press briefing where the Governor confirmed the reopening of the Chase bank after it was put under receivership.The briefing was held at CBK headquarter on April 20. Photo/Enos Teche. The Monetary Policy Committee has lowered the base lending rate to 8.25 per cent from 8.5 per cent in its first sitting this year, as banks move to adjust to the post rate cap regime.
The Central Bank of Kenya’s top decision making organ on Monday pegged its decision on domestic macroeconomic stability, despite potential risks posed by food supply and increased global uncertainties.
“Growth in private sector credit, particularly to Micro, Small and Medium-sized Enterprises is expected to increase gradually due to the deployment of innovative MSME credit products, the repeal of interest rate caps and the continued easing of credit risk,” CBK Patrick Njoroge said.
This is the second sitting after November’s scrapping of interest rate law which for the last three years, was blamed for starving the private sector and households of credit, with ripple effects to the economy.
Banks have since September 2016 to November last year priced credit facilities at four percentage points above the CBK rate, which was retained at nine per cent for a better part of last year.
After the repeal, lenders are now at liberty to set their rates, which majority say will be based on the risk of a customer.
"For customers with higher risk profiles we may see a two to three per cent increase,"Kenya Bankers Association chairman and KCB Group CEO Joshua Oigara said.
The MPC’s Private Sector Market Perception Survey conducted in January 2020 indicates that inflation expectations remain well anchored, mainly due to expected lower food and electricity prices.
However, some respondents expect that the recent disruptive rainfall and locust invasion in some parts of the country could lead to post-harvest losses and exert moderate upward pressure on food prices.
According to CBK, respondents remained optimistic on economic prospects due to, among other factors, payments of pending bills by the government, improving weather conditions and implementation of the Big 4 agenda projects.There is also expected improvement of lending to the private sector following the repeal of interest rate caps, renewed […]
