This archive report was first published on 25 November 2019.
On November 25, 2019, the Central Bank of Kenya (CBK) made a significant move to stimulate economic growth by lowering its benchmark lending rate for the first time since May 2018.
Following the removal of the legal caps on borrowing charges on November 7, the CBK's Monetary Policy Committee cut the CBR rate to 8.50 percent from 9.0 percent, citing that the economy was operating below its potential.
This decision is expected to encourage commercial banks to reduce their lending rates, thereby increasing the supply of credit and putting more money in the hands of consumers to boost demand for goods and services in corporate Kenya.
According to the CBK, credit to the private sector grew 6.6 percent in the year to October, which is below the ideal growth level of between 12 and 15 percent.
The CBK's move is a response to the slow growth in credit to the private sector, which has been a concern for the economy.
