NAIROBI, Kenya, Feb 5 – The Central Bank of Kenya (CBK) has reduced its official lending rate by 50 basis points to 10.75 percent, aiming to stimulate economic growth.
The Monetary Policy Committee (MPC) made the cut amid expectations that inflation will remain stable in the near term. This outlook is supported by low and stable core inflation, lower energy prices, and exchange rate stability.
“Additionally, central banks in major economies have continued to lower their interest rates, but at different paces,” MPC Chair Kamau Thugge said in a statement.
The committee noted that economic growth slowed in 2024, creating room for further easing of monetary policy to support economic activity while ensuring exchange rate stability.
To complement the rate cut, the Cash Reserve Ratio (CRR) was also reduced by 100 basis points to 3.25 percent from 4.25 percent, a move aimed at further lowering lending rates.
CBK has also begun on-site inspections to ensure banks implement the Risk-Based Credit Pricing Model (RBCPM) and lower interest rates accordingly.
“Under the recent Banking Act amendments, any bank failing to pass on the benefits of reduced funding costs to borrowers will be penalized,” the statement read.
