NAIROBI, Kenya, Nov 23 – The Central Bank of Kenya (CBK) on Thursday retained the base lending rate at 10 percent providing relief for millions of borrowers.
The Monetary Policy Committee (MPC) says inflationary pressures in the economy were muted, and inflation is expected to continue to decline in the short term
The Committee noted that despite the effects of the drought experienced in the first half of 2017, and the prolonged elections in the second half of the year, economic growth has remained resilient.
CBK governor Patrick Njoroge says growth has principally been supported by the services sector particularly the Micro, Small and Medium Enterprises (MSMEs).
The foreign exchange market has remained stable, supported by strong diaspora remittances, resilient tea and horticultural exports, and the continued recovery in tourism.
“The economy is expected to grow by 5.1 percent in 2017, and to pick up strongly in the medium term supported by a stable macroeconomic environment,” Njoroge says.
Private sector credit grew by 2.0 percent in the 12 months to October compared to 1.7 percent in the 12 months to September maintaining the upward trend since August 2017.
“Notably, credit to the domestic trade, manufacturing, and real estate sectors grew by 12.6 percent, 10.2 percent, and 10.0 percent respectively, to October 2017,” Njoroge added.
The government capped lending rates last September at four percentage points above the Central Bank Rate, saying they were too high and banks had repeatedly failed to lower them.