An­a­lysts ex­pect base lend­ing rate to re­main at 10pc

FORE­CAST Loan pric­ing pro­jected to hold as Kenyan shilling shows re­silience

Business Daily (Kenya) - - MONEY & MARKETS - Brian Ngugi bn­joroge@ke.na­tion­media.com

The Cen­tral Bank of Kenya (CBK) ad­vi­sory com­mit­tee is likely to re­tain the base lend­ing rate un­changed at 10 per cent when it meets on Mon­day, an­a­lysts have pro­jected.

The meet­ing is be­ing held on the back­drop of sen­ti­ments by the CBK gover­nor this week giv­ing the clear­est sig­nal that the reg­u­la­tor in­tends to push for a re­peal of the year-old law cap­ping in­ter­est rates be­cause of the neg­a­tive ef­fect it has had on the econ­omy. CBK gover­nor Pa­trick Njoroge, speak­ing on Wed­nes­day, how­ever, warned that com­mer­cial banks would have to show dis­ci­pline in the pric­ing of loans so as not to over­charge bor­row­ers.

An­a­lysts fore­cast the rate to re­main steady as the shilling shows signs of re­silience, with the coun­try’s for­eign re­serves ris­ing grad­u­ally.

This is even as in­fla­tion stub­bornly re­mains above the pre­ferred range of five per cent plus or mi­nus 2.5 per­cent­age points, and growth of credit to the pri­vate sec­tor at its low­est level in over a decade.

“The eco­nomic in­di­ca­tors re­mained un­changed since the last MPC meet­ing in July. With in­fla­tion hav­ing eased to 8.04 per cent from 9.2 per cent since the last meet­ing and the cur­rency hav­ing ap­pre­ci­ated by one per cent over the same pe­riod of time, we be­lieve that the MPC should adopt a wait and see ap­proach,” said Cy­tonn in a re­search note ahead of Mon­day’s meet­ing.

In the pre­vi­ous meet­ing held on July 17, the max­i­mum cost of loans re­mained un­changed pro­vid­ing re­lief for mil­lions of bor­row­ers.

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