Kenya’s central bank lowers lending rate to 8.5% from 9%

Governor of the Central Bank of Kenya, Patrick Njoroge, speaks September 26, 2018 during a press conference in Nairobi. (Photo by SIMON MAINA / AFP) (Photo credit should read SIMON MAINA/AFP/Getty Images)
FILE PHOTO: Kenya Central Bank Governor Patrick Njoroge displays the newly designed 1000 Kenyan shilling bank note during a news conference at the Central Bank in Nairobi, Kenya, June 3, 2019. REUTERS/Baz Ratner/File Photo

The Monetary Policy Committee of Kenya’s central bank on Monday announced a lowering of the Central Bank Rate (CBR) from 9.0 percent to 8.50 percent.

In a statement, the bank said it took the decision noting that inflation expectations remained within target range and there was room for accommodative monetary policy to support economic activity. The bank also noted that the economy was operating below its potential.

In October, inflation stood at 4.9 percent compared to 3.8 percent in September. The bank said it expected overall inflation in November to remain within range owing to lower food and electricity prices.

The Central Bank of Kenya (CBK) said real Gross Domestic Product (GDP) grew by 5.6 percent in the first half of the year and the economy remained strong despite a slowdown in agricultural production due to delayed and below average rainfall.

However, the bank added that the Kenyan economy could experience stronger growth in the second half of the year based on leading indicators supported by a number of factors.

The committee also welcomed the repeal of the capping of interest rate which it said led to a notable restriction of credit especially to the financially vulnerable.

The committee said the change should reinstate transparency of monetary policy decisions and bolster transmission of monetary policy.

The committee said it was prepared to take any extra measures as it continued to monitor economic developments locally and globally.

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