This archive report was first published on 24 July 2019.
On July 24, 2019, the Central Bank of Kenya (CBK) made a crucial decision to maintain its benchmark lending rate at 9.0 per cent for the seventh time in a row.
This move came as lenders continued to withhold credit to the private sector, a trend that has been observed for some time.
According to the CBK, the decision to hold rates was made in an environment where inflation expectations were within the target range and the economy was operating close to its potential.
However, CBK Governor Patrick Njoroge noted that there was a need to be vigilant on the possible effects of recent increases in fuel prices, the ongoing demonetisation, and the increased uncertainties in the external environment.
Private sector credit had grown by 5.2 per cent in the year to June, compared to 4.4 per cent in May, but this growth remained well below the central bank's target rate of 12-15 per cent.
Bankers have attributed the cap limiting commercial lending rates to four percentage points above the benchmark as the reason for cutting back on loans to high-risk groups, with normal bank lending capped at 13 per cent.
