Kenya’s Central Bank Cuts Benchmark Rate Amid Declining Economic Growth

NAIROBI, Xinhua: The Central Bank of Kenya (CBK) on Thursday reduced its benchmark lending rate to 11.25 percent from 12 percent amid declining economic growth.

Kamau Thugge, the CBK governor who chaired the Monetary Policy Committee (MPC) meeting, noted that the performance of the Kenyan economy slowed down in the first half of 2024, with gross domestic product growth averaging 4.8 percent compared to 5.5 percent in the first half of 2023.

“This slowdown mainly reflected a deceleration in growth in most sectors of the economy,” Thugge said in a statement released in Nairobi, Kenya’s capital.

He said the MPC met against a backdrop of an improved global outlook for growth, lower inflation in advanced economies, and persistent geopolitical tensions.

The apex bank noted that there was scope for a further easing of the monetary policy stance to support economic activity while ensuring exchange rate stability.

Thugge observed that short-term rates on government securities had declined sharply in line with the benchmark lending rate, but banks had not responded by lowering their rates proportionately.

The MPC urged banks to take necessary steps to lower their lending rates in order to stimulate credit to the private sector, and thereby boost economic activity.

The MPC said that it would closely monitor the impact of the policy measures as well as developments in the global and domestic economy, ready to take further action as necessary in line with its mandate.