× Business BUSINESS MOTORING SHIPPING & LOGISTICS DR PESA FINANCIAL STANDARD Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
×

Will Central Bank cut lending rate?

BUSINESS
By | May 3rd 2012

By MORRIS ARON

The Central Bank committee that determines the direction interest rates take will today be under the spotlight as it sits down to signal which way for the cost of credit.

While economists say it is likely that the Monetary Policy Committee (MPC) will keep the rate – known as the Central Bank Rate (CBR) – at 18 per cent given the prevailing economic conditions, concern is mounting that economic growth prospects could be missed.

However, inflation rate slowed last month to its lowest level since May last year according to data from Kenya National Bureau of Statistics.

The inflation rate fell by far more than expected to 13.06 per cent last month from 15.61 per cent in March, despite a 1.21 per cent increase in food prices from a month earlier.

But while that is the case, the possibility of a rise in crude oil prices – which is beyond Treasury’s control –could revert the gains made on Taming the cost of living and trigger foreign exchange volatility.

"MPC could vote to have a minimal cut or retain the Central Bank Rate at 18 per cent," Evans Mugi Research Analyst at Genghis Capital.

If MPC retains the current rates at 18 per cent, then there is a possibility of a drop in consumer spending as the cost of credit will remain high.

Slow lending will reduce the level of imports of inputs needed to produce goods for export – a development that is bound to lead to foreign exchange volatility.

Share this story
Nyagah warns of pyramid schemes
Co-operatives Development and Marketing Minister Joseph Nyagah has warned Kenyans to be wary of investment schemes promising more than 10 per cent in returns ahead of the General Elections.
Survey: Why 40 pc of workers want to quit their jobs
More than half of 18 to 25 year-olds in the workforce are considering quitting their job. And they are not the only ones.
.
RECOMMENDED NEWS
Feedback