Kenyan bank chief executives expect an increase in lending to the private sector following the Central Bank of Kenya’s (CBK) decision to lower its benchmark lending rate.
Thank you for reading this post, don't forget to subscribe!The CBK’s Market Perceptions Survey, which involved commercial banks, microfinance institutions, and non-bank private firms, revealed optimism fueled by a stable economy and controlled inflation.
Earlier this month, the CBK reduced the Central Bank Rate (CBR) by 25 basis points to 9.25 percent from 9.5 percent. Governor Kamau Thugge said the move aims to sustain price stability and anchor inflation expectations while encouraging borrowing.
Lower Borrowing Costs
“Bank respondents expected demand for credit to be largely driven by lower interest rates leading to reduced borrowing costs for businesses to finance working capital and capital expenditure,” the survey noted.
Respondents also predicted recovery in key sectors such as trade, tourism, transport, and agriculture. However, they cautioned that credit uptake might still face challenges due to reduced disposable income and strict lending policies under the Risk-Based Pricing Model.
Kenya’s inflation rate stood at 4.6 percent in September, up slightly from 4.5 percent in August, remaining within the CBK’s target range of 5±2.5 percent.
