On August 6, 2024, the Central Bank of Kenya (CBK) made a big announcement. They lowered their main lending rate from 13% to 12.75%. This is the first time they’ve cut rates in four years.
The CBK hopes this move will help the economy grow while also keeping prices stable. Kamau Thugge, the head of the CBK said in a statement released in Nairobi kenya’s capital ,
Good news came recently about inflation, which is when prices go up. In Kenya, inflation went down to 4.3% in July from 4.6% in June. This happened because food and fuel became cheaper, which helped steady the economy.
The bank wants to find a balance. They want to make it easier for people to borrow money, but they also want to keep the Kenyan currency strong.
This rate cut is important because it follows what other countries are doing. Many central banks around the world are making it easier to borrow money. As prices become more stable in rich countries, Kenya is following this trend.
Kenya’s economy has been doing well in some areas. It grew by 5% in the first three months of 2024. This growth came mostly from farming and services doing well.
However, there are still some problems. Factories and construction companies are having a hard time. Also, people are worried about high costs for businesses and recent protests in the country.
Even with these challenges, the CBK thinks the future looks good. They believe the economy will grow by 5.4% this year.
The lower lending rate should make loans cheaper for people and businesses. This could lead to more spending and investment, which would help the economy even more.
The CBK says they’ll keep a close eye on how things are going. They’re ready to make more changes if needed.