The Central Bank of Kenya CBK has announced a reduction of the Central Bank Rate to 12% from 12.75%.
The decision came after the Monetary Policy Committee (MPC) met on October 8, 2024, and reviewed the outcomes of its previous decisions and measures implemented to anchor inflationary expectations and maintain exchange rate stability. Why CBK lowered lending rate MPC explained that Kenya’s overall inflation declined to 3.6% in September 2024 from 4.4% in August, thereby remaining well below the mid-point of the target range.
MPC further noted that the overall inflation is expected to remain below the mid-point of the target range in the near term, supported by lower food inflation owing to improved supply from the ongoing harvests, a stable exchange rate, and stable fuel prices. In a statement seen by TUKO.co.ke, the MPC observed that Kenya’s GDP growth slowed down, with real GDP growing by 4.6% compared to 5.6% in the second quarter of 2023.
This slowdown mainly reflected a deceleration in growth in most sectors of the economy, leading to a revision of the economy’s projected growth in 2024 to 5.1%. “The MPC also 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 stance to support economic activity, while ensuring exchange rate stability. Therefore, the Committee decided to lower the Central Bank Rate (CBR) to 12%,” read a press release by CBK.
