Central Bank to hold base lending rate at 10 per cent

Central Bank of Kenya Photo:Courtesy

Central Bank of Kenya (CBK) is expected to hold the base lending rate at 10 per cent when its decision-making organ meets to review the rate.

The Monetary Policy Committee (MPC) in its last meeting spared borrowers from a fresh round of interest rate hikes, maintaining the rate at 10 per cent against the backdrop of improved weather conditions, expectations of lower food prices and general macroeconomic stability.

“The monetary policy stance in 2017 will aim at maintaining overall month-on-month inflation rate within the Government’s target range of 2.5 per cent on either side of the five per cent target,” said the committee in a statement.

While the inflation rate accelerated to 8.04 per cent in August, the food supply front has improved slightly following the onset of the short rains in most parts of the country while the shilling has remained largely stable against the dollar.

This is despite the market remaining jittery over uncertainty occasioned by next month’s repeat presidential election and reports that commercial banks have petitioned the Central Bank to begin the process of repealing the Banking (Amendment) Act 2016 putting a cap on interest rates.