CBK’s Monetary Policy Committee is set to meet on January 30, over the Central Bank Rate (CBR), reads a notice on its website.
Borrowers have had a reprieve following the enactment of the Banking Amendment Act (2016) that pegs loan interest rates at not more than four per cent of the CBR.
Interest on deposits, according to the Act, is seven per cent.
Currently, CBR is 10% which means lenders can only give credit at 14 per cent.
While maintaining the rate at 10 per cent during their last meeting in November, the committee said the inflationary pressures were mild and that inflation will remain within the government target for the short term hence the decision to retain the CBR.
Governor Patrick Njoroge said even though inflation rose to 6.5% in October, it, however, remained within the government’s target range.
On the forex market, he said it has been relatively stable despite the volatility in the global financial markets following the US elections and the seasonal increase in demand for foreign exchange by corporates to finance dividends payments.
“Global growth prospects remain fragile on account of uncertainties in part due to the impact of Brexit and political developments in the US. Uncertainty relating to the tightening of the US monetary policy and its implications for global capital flows remain a concern,” Njoroge added in a statement.
He said the economy continued to show signs of stability but added that there is need to gather more data on how decisions in the US and Europe will affect Kenya’s economy.
On the introduction of the Banking Act, the committee had noted that the available data were inadequate to facilitate a conclusive analysis of their impact of the monetary policy and the overall economy.