Relief for borrowers as Central Bank holds benchmark rate at 9pc

Tuesday, September 24th, 2019 00:00 |
CBK governor Patrick Njoroge. Photo/File

It is a sigh of relief for borrowers after Central Bank of Kenya (CBK) retained the policy lending rate at 9 per cent in its meeting yesterday.

The bank’s Monetary Policy Committee (MPC) said benchmark lending rate has been retained on account of stable inflation which remained well anchored within the target range.

A statement from MPC Chairman and CBK Governor Patrick Njoroge said the economy is also operating close to its potential.

The retention of the lending rate was the eighth in series since the monetary committee lowered the Central Bank Rate from 9.50 per cent on May 28, 2018 by 50 per cent basis point.

Njoroge said the committee noted there was a need to tighten fiscal policy to provide scope for accommodative monetary policy in the near term.

“The committee concluded that the current policy stance remains appropriate, and therefore decided to retain the CBR at 9.00,” he said.

Economic activity

The Governor said the leading indicators of economic activity such as growth in electricity and cement consumption, tourist arrivals, consumption-based taxes and imports of intermediate goods, indicate that growth has remained strong in 2019.

Caleb Mugendi, assistant manager with Cytonn Investment, said due to low inflationary pressure expected, the rate was expected to be retained.

“This was in line with our expectations as per our note, which was informed by the country’s macroeconomic fundamentals, which had remained stable as well as sustained optimism on the economic growth prospects,” he said.

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