Lending increases as CBK maintains key loans rate – Business Daily

The Central bank of Kenya, Nairobi. FILE PHOTO | NMG
The Central Bank of Kenya (CBK) on Wednesday retained the base lending rate at 7 percent for the twelfth time in a row as lending by commercial banks to companies and individuals rose the highest since February last year pointing to recovery as the economy reopened.
This has spared consumers any increases on the cost of loans at the start of New Year after the Monetary Policy Committee (MPC) send its signal to banks to hold interest rates steady.
CBK Governor said private sector credit grew by 8.6 percent in the year to December compared to 7.8 percent in October, well below the central bank’s target rate of 12-15 percent, deemed adequate to support economic development.
The MPC said it held the key rate in its first meeting of 2022 in an environment where inflation expectations were within the target band of 2.5 and 7.5 percent and the economy was on the road to recovery following initial disruption brought about by the Covid-19 pandemic.
“The Committee noted that inflation expectations remain anchored within the target range, and leading economic indicators showed continued robust performance,” MPC chairman and CBK governor Patrick Njoroge said after its meeting.
“The Committee concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 percent.”
CBK Governor Patrick Njoroge said without giving figures that the economy rebounded in the three months to December, adding that the State’s stimulus programme would boost economic recovery.
“The Committee noted the robust implementation of the FY2021/22 Government Budget, particularly the strong rebound in revenue performance to December 2021 reflecting the pickup of economic activity and improvement in the business environment,” Dr Njoroge said after its meeting.
“The continued rollout of the Economic Stimulus Programme and Economic Recovery Strategy were also noted, and are expected to continue to support the economy.”
The inflation-targeting MPC, however, noted it sees the need to closely monitor developments, adding that it stands ready to respond to any adverse economic effects.
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