Central Bank of Kenya’s (CBK) policy-making committee meets today amid expectations it could raise its benchmark lending rate, Media Max reports.
The Monetary Policy Committee (MPC) last met on March 27 and retained the Central Bank Rate (CBR) at 10 per cent, citing the stable currency, narrow current account deficit, and high forex reserves, despite the high inflation rates.
During the meeting, CBK Governor Patrick Njoroge said the Committee will continue to closely monitor developments in the domestic and global economies and stands ready to take additional measures as necessary.
The MPC meetings are held once every two months unless the committee decides to call them more often, usually in response to turbulence in the foreign exchange market. The MPC is the independent rate-setting arm of the regulator.
According to experts, the MPC takes its monetary policy decisions based on the multiple indicator approaches by looking into issues such as inflation, growth, employment, banking stability and the need for a stable exchange rate.
The meeting comes amid complaints from commercial banks that private sector credit growth has declined since the enactment into law of the Banking Amendment Act 2015, which capped the interest rates at four per cent above the CBR.
Although some stakeholders in the banking industry have been campaigning that the interest rates cap be repealed, Deputy President, William Ruto, has assured that the Government will not revisit the issue.
“There is need for the banks to develop business models that would ensure that they remain competitive in the new environment,” Ruto said