Relief for Kenyans as CBK Retains Minimum Lending Rates

CBK Governor Patrick Njoroge addresses MPs at the Safari Park Hotel on Monday, September 19, 2022.
CBK Governor Patrick Njoroge addresses MPs at the Safari Park Hotel on Monday, September 19, 2022.
Photo
National Assembly

The Central Bank of Kenya (CBK) granted Kenyans a reprieve after it announced that it would not increase the minimum lending rates.

In a statement dated Monday, January 30, CBK Governor Patrick Njoroge announced that the Monetary Policy Committee (MPC) would retain the Central Bank Rate at 8.75 per cent.

Njoroge explained that the committee was satisfied with the impact of the November 2022 review which factored in inflation.

He added that recent government policy on revenue collection was a key factor in retaining the minimum lending rates.

CBK Governor Patrick Njoroge during past interview with Bloomberg.
CBK Governor Patrick Njoroge during a past interview with Bloomberg.
Photo
Bloomberg

"This action will be complemented by the recently announced measures to allow limited duty-free imports on specific food items, which are expected to moderate prices and ease domestic inflation pressures.

"The committee will closely monitor the impact of the policy measures, as well as developments on the global domestic economy, and stands ready to take additional measures when necessary," the statement read in part.

According to the CBK Governor, MPC would convene the next meeting in March 2023. Meanwhile, loans offered to Kenyans will not be charged interests of four percentage points above the Central Bank Rate (CBR).

The MPC reported growth in the private sector credit from 8.6 per cent in 2021 to 12.5 per cent in 2022. In addition, there was increased economic activity in the country evidenced by the increase in demand for loans.

Njoroge, who doubles as the committee's chair, indicated that the number of non-performing loans dipped by 0,3 per cent. He further gave an update on the foreign exchange reserves.

"The CBK reserves stand at Ksh870 trillion (USD7,005 million) and continue to provide adequate cover and a buffer against any short-term shocks in foreign exchange," the statement read in part.

MPC noted that the drop in food prices contributed to the fall of the inflation rate which stood at 9.1 per cent as of December 2022.

Other sectors which had shown recovery in the two-month period under review include manufacturing, tourism, and export.

Kenyans follow proceedings at the Nyayo Stadium during Kenya's 59th Jamhuri Day celebrations.
Kenyans follow proceedings at the Nyayo Stadium during Kenya's 59th Jamhuri Day celebrations.
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