NAIROBI, Kenya, OCT 8 – The Central Bank of Kenya (CBK) has reduced its base lending rate by 75 basis points to 12%, down from 12.75%.
The decision follows a decline in inflation, which fell to 3.6% in September from 4.4% in August.
The Monetary Policy Committee (MPC) emphasized that it will closely monitor the effects of this adjustment and make further changes if necessary.
“The MPC noted that overall inflation has declined further and is expected to remain below the midpoint of the target range in the near term, supported by stable food inflation attributed to improved supply from the ongoing harvests, a stable exchange rate, and lower fuel inflation,” CBK Governor Kamau Thugge announced in a statement.
The apex bank also highlighted a credit deceleration in the economy, as both businesses and individuals have been reluctant to take on expensive loans due to high interest rates, underscoring the need for the recent rate cut to encourage borrowing and stimulate economic activity.
“The MPC also noted the sharp deceleration in credit to the private sector, and the slowdown in growth in the second quarter of 2024, and concluded that there was scope for a further easing of the monetary policy stance to support economic activity, while ensuring exchange rate stability.”
