CBK Maintains Key Lending Rate at 10pc Citing Optimism on Economy and Declining Inflation

Central Bank of Kenya (CBK) retained the benchmark lending rate at 10 percent, making it the 15 straight months that the rate has remained unchanged.

The Monetary Policy Committee (MPC) on Monday said the decision was taken to due to well anchored domestic inflation despite upside risks stemming from rising global crude oil prices and a relatively stable foreign exchange market owing to healthy diaspora remittances and a rebound in exports.

Read: Central Bank Expected to Retain Policy Rate at 10pc

In its MPC Private Sector Market Perception Survey conducted in January 2018, it showed an upsurge in optimism by the private sector for the economic prospects in 2018.

“More than 90 percent of the respondents were optimistic about prospects for 2018, compared to 65 percent in November 2017… attributed to a stable macroeconomic environment, improved business environment and investor confidence, continued public investment in infrastructure, and expected commencement of direct flights to the U.S.”

“The Committee noted that there was some room for accommodative monetary policy in the near term, as well as the risk of perverse outcomes,” said Dr. Patrick Njoroge the CBK Governor and MPC chair.

However, it concluded that there was a need to further monitor and assess the impact of its policy actions.

The Central Bank Rate was last changed in September 2016 when the committee cut it from 10.5 per cent to 10 per cent in the same month that a cap on bank loan interest rates took effect.