Kenya’s financial markets remained stable following the Central Bank’s decision to maintain its benchmark rate at 13%, signaling a commitment to stabilizing the country’s credit market. The Central Bank of Kenya’s Monetary Policy Committee (MPC) highlighted the positive impact of its previous adjustments to the Central Bank Rate (CBR) on economic fundamentals.
Meeting on April 3, 2024, against a backdrop of improved global growth and inflation outlooks despite ongoing geopolitical tensions, the MPC noted that its earlier measures had successfully reduced inflation, addressed exchange rate pressures, and anchored inflationary expectations.
The Committee expects overall inflation to continue its downward trend in the near term, supported by lower food and fuel prices, as well as the effects of recent exchange rate movements. Therefore, it was decided to maintain the current monetary policy stance to ensure inflation continues to decline towards the 5.0 percent mid-point target range. Central Bank of Kenya Governor Mr. Kamau Thugge, who chairs the MPC, stated that the committee would closely monitor the impact of its policies and economic developments, taking further action as necessary. The next MPC meeting is scheduled for June 2024.
The decision to maintain the CBR at 13% was welcomed by the credit markets, as many had anticipated a tightening of the market through a rate hike, which would have impacted credit availability from banks and other lenders. Commercial bank lending to the private sector grew by 10.3% in February 2024, compared to 13.8% in January 2024.
Credit growth in key sectors included manufacturing (13.6%), transport and communication (7.5%), trade (10.7%), and consumer durables (7.4%). The number of loan applications and approvals remained strong, indicating sustained demand, particularly for working capital.
