Why bankers want base lending rate maintained at 8.75pc
KBA said overall inflation remains within the target range, while domestic economic growth remains resilient, reducing the need to either lower or raise the Central Bank Rate.
Nairobi, Kenya – The Kenya Bankers Association (KBA) has urged the Central Bank of Kenya (CBK) to retain the base lending rate at 8.75 percent, highlighting stable inflation, strong economic growth, and a stable exchange rate. KBA noted that inflation remains within the target range, domestic economic growth remains resilient, and the Kenya shilling is supported by robust external inflows and stronger foreign exchange reserves.
"With inflation currently anchored within the target range and minimal threats to its escalation in the near term, as well as sustained exchange rate stability, we view that maintaining the current stance of monetary policy in keeping the CBR unchanged at 8.75% would be appropriate to support private sector credit growth and strengthen economic activity," the KBA stated prior to the Monetary Policy Committee (MPC) meeting tomorrow.
The CBK's MPC had previously reduced the CBR from 9 percent to 8.75 percent in February to stimulate private sector credit growth. In April, the committee maintained the rate at 8.75 percent due to rising global risks stemming from the ongoing Middle East conflict and the need to anchor inflation expectations and maintain exchange rate stability amidst pressure from higher global oil and fertilizer prices.
The Committee concluded that the existing monetary policy stance is suitable to ensure inflation expectations stay within the target range.
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