× 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

Central Bank maintains lending rate at 18 per cent

By Jackson Okoth | May 4th 2012

By Jackson Okoth

Individuals and business that depend on bank credit will have to suffer a little longer.

This is after the Central Bank of Kenya (CBK), through its policy organ-the monetary policy committee, decided to maintain the rate at which it lends to commercial banks at 18 per cent.

It is the fifth time the committee has maintained the Central Bank Rate (CBR) since beginning of this year.

Households and small business struggling to service their bank loans will also have to dig deeper into their pockets.

Signs of credit constraints in market are seen by the scramble by borrowers fleeing from banks to Savings and Credit Co-operatives, pyramid schemes and shylocks.

Though cost of living has been on a decline since January this year, the committee has expressed concerns that rising price of crude oil on the international markets poses a threat and could trigger another round of exchange rate volatility and inflationary pressure.

"Inflation has declined from 15.6 per cent in March to 13 per cent in April, same to cost of items that does not include either food or fuel, an indication that the monetary policy stance adopted is working," said Prof Njuguna Ndungfu, chairman of the committee.

The policy think tank notes that confidence in the economy remains high as shown by a rise in diaspora remittances.

Search for alternatives

A slowdown in demand for credit by the private sector has also been observed, raising hopes inflation has been contained.

The exchange rate against other major currencies is also expected to remain stable. "The International Monetary Fund disbursed an extended credit facility in April, 2012 increasing the CBKfS foreign exchange reserves position to $4,629 million or 4.02 months of import cover," said the committee.

It is the small and medium sized banks that are hit by huge interest expenses on the books, if the current high rates are sustained for long.

" We are not excited about the prevailing rates and are hopefully that this short term phenomenon will change soon to avoid distortions in the credit market," Ecobank Kenya Chief Executive, Tony Okpanachi told The Standard.


Share this story
State launches e-learning model classroom
Primary and Secondary school students received a major boost in information, communication and technology, thanks to the launch of a new model classroom that will embrace e-learning.
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.