The Central Bank of Kenya has lowered the interest rate to 8.25% from 8.5% since the economy is performing way below it’s potential level.
This is the second time the Central Bank is lowering the rate after the repeal of the interest rate cap. In November 2019, CBK lowered the rate interest rate from 9% to 8.5%.
The CBK Governor Dr. Patrick Njoroge said that this has has a positive impact on the economy.
In November 2019, president Uhuru Kenyatta signed into law the finance bill which repealed the capping of bank rates.
Experts predicted that the move would enhance access to credit by private sector which would cut out unregulated lenders and exploitative shylocks.
This seems to have bore fruits as the CBK Governor in his latest press release said that the private sector has experienced a significant growth. He said that the private sector grew by 7.1%.
Financial experts say that though commercial banks can now borrow loans from the Central Bank at a low rate, it’s at their discretion to decide whether they will pass on the lower rates to their borrowers.