NAIROBI, Kenya, Oct 16 – Kenyan bank chief executives expect lending to the private sector to rise following the Central Bank of Kenya’s (CBK) recent cut in its benchmark lending rate.
According to the CBK’s Market Perceptions Survey, which covered commercial banks, microfinance institutions, and non-bank private firms, the outlook is supported by a stable macroeconomic environment and low, steady inflation.
On October 7, the CBK lowered the Central Bank Rate (CBR) by 25 basis points to 9.25 percent from 9.5 percent to stimulate credit growth and support economic activity.
Governor Kamau Thugge said the move aims to sustain price stability while anchoring inflation expectations.
“Bank respondents expected demand for credit to be largely driven by lower interest rates leading to reduced borrowing costs for businesses to finance working capital and capital expenditure,” CBK’s Market Perceptions Survey noted.
Respondents also cited expected recovery in key sectors such as trade, tourism, transport, and agriculture.
However, they warned that credit uptake could be dampened by reduced disposable incomes and cautious lending practices linked to the Risk-Based Pricing Model.
Kenya’s overall inflation stood at 4.6 percent in September, slightly up from 4.5 percent in August, remaining within the 5±2.5 percent target range.
