Kenya Reduces Benchmark Interest Rate to 12%
With the aim to drive private sector credit growth, the Central Bank of Kenya cut its benchmark interest rate by 75 basis points (bps) to 12% at its meeting on October 8th, 2024.
Analysts said this is the second consecutive rate reduction for the first time since the Covid-19 crisis. This decision was prompted by inflation easing to the lower bound of the central bank’s target range of 2.5% to 7.5%, along with a more stable Kenyan shilling.
The country annual inflation rate decelerated to 3.6% in September 2024, the lowest since December 2012, from 4.4% in the previous month. In August, the bank cut the rate by 25 basis points, the first in about four years. Last week, Finance Minister John Mbadi said the central bank rate should start lowering its lending rate due to falling inflation in recent months.
Ahead of the rate decision, umbrella Kenya Bankers’ Association said in a research note on Oct.3 that there was room for the bank “to effect a decisive policy rate cut” to support stronger economic growth by pushing for a recovery in growth of private sector credit.
“The MPC … 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,” the bank said in a statement. #Kenya Reduces Benchmark Interest Rate to 12% Stanbic IBTC Adds Fixed Income Asset into Securities Lending Services
