Banks to charge 13pc interest on loans

The Central Bank (CBK) has retained the benchmark lending rate at 9 percent meaning that banks would be required to charge a maximum of 13 percent interest on loans.

Central Bank Governor Dr. Patrick Njoroge says this decision was informed by inflation remaining within the target range and that the economy is operating close to its potential.

You will continue borrowing from banks at a maximum of 13 percent interest over the next two months after the central bank’s Monetary Policy Committee retained the benchmark lending rate at 9 percent.

In the latest decision, CBK says inflationary pressures are within the government’s target range of 2.5 to 7.5 percent.

In a statement, CBK Governor Dr. Patrick Njoroge who chairs the Monetary Policy Committee says: “The Committee noted that inflation expectations remained well anchored within the target range, and that the economy was operating close to its potential.”

The MPC concluded that the current policy stance remains appropriate, and will continue to monitor any perverse response to its previous decisions.

The MPC says in the 12-month period to December 2018, private sector credit grew by 2.4 percent, compared to 3 percent in November, largely due to successful recovery efforts and loan repayments.

Strong growth in private sector credit was observed in the finance and insurance, consumer durables, business services, and private households.

CBK expects private sector credit growth to strengthen this year as compared to 2018, with the anticipated higher economic activity and easing credit risk.

Dr. Njoroge says the MPC Private Sector Market Perception Survey conducted this month revealed increased optimism that economic growth would be stronger in 2019 due to, a better investment climate, continued infrastructure development, low oil prices, increased agricultural production and implementation of the Big 4 projects.

However, the central bank is concerned that trade tensions between the U.S. and China, Brexit negotiations and a slowdown of the Chinese economy could have some effect on the Kenyan economy.

  

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