Kenya Bankers Urge Central Bank to Maintain 13% Rate

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Kenya’s banking sector is advocating for the Central Bank of Kenya (CBK) to maintain its current monetary policy stance at its upcoming meeting, citing stable macroeconomic indicators despite global headwinds. The Kenya Bankers Association (KBA) expects the Monetary Policy Committee (MPC) to keep the Central Bank Rate (CBR) unchanged at 13% when it meets on August 6.


Key Factors Supporting the Stance:


1. Inflation Stability: 

Headline inflation remains within the target range, with inflation declining to 4.6% in June, its lowest level since October 2020.


2. Resilient Economic Growth: 

Despite slowing global growth and weak private sector sentiments, Kenya’s economy grew by 5% in the first quarter of 2024, driven by strong performance in agriculture and services sectors.


3. Credit Supply Conditions: 

Private sector credit continues to decelerate due to tighter credit supply conditions driven by deteriorating credit risk.


4. Interest Rates: Both short- and long-term market interest rates remain elevated, mirroring the Central Bank Rate.



5. Stable Exchange Rate: The Kenya Shilling remains stable, supported by increased foreign exchange inflows from key exports and steady inward remittances.


However, the KBA warns that emerging government financing risks pose threats to exchange rate stability. Globally, the IMF projects modest growth, with notable slowdowns in the US and Japan, and recovery in Europe and China. Domestically, while the agriculture sector grew, the industrial sector’s performance remained subdued.


In summary, the banking sector recommends maintaining the 13% benchmark rate to sustain economic stability and manage risks. The upcoming MPC meeting will be crucial in shaping Kenya’s monetary policy landscape.


Please note that this blog post provides a concise overview, and further details can be explored through additional research. If you have any specific questions or need more information,

 feel free to ask! 😊



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