Central Bank Monetray Policy Committe (MPC) has lowered Central Bank Rate to 8.5 from nine per cent, a signal to banks to lend at a lower interest rate to stimulate the growth of the economy.
CBK Governor Patrick Njoroge said the committee noted the ongoing tightening of fiscal policy and concluded there was room for accommodative monetary policy to support economic activity.
He said the idea of lowering the Central Bank rate (CBR) to 8.5 per cent would help stimulate the economy. The reduction is the first since June 9,2015, when the committee raised the benchmark lending rate from 8.50 per cent to 10.0 per cent to contain the inflation rate which then was 6.87 per cent.
This is not the lowest interest rate every recorded in Kenya’s history. On January 27, 2011, the team lowered the CBR to 575 per cent – which has been the lowest ever attained in the country.
In a statement, Njoroge said inflation expectations in the past remained well within the target rangeadding that the economy was operating below its potential level.
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