Kenya’s central bank has reduced its benchmark lending rate by 75 basis points to 11.25%, citing a slowdown in economic growth in the first half of 2024. This marks the third consecutive rate cut, following a 75-basis-point reduction in October and a 25-basis-point cut in August.
The Monetary Policy Committee (MPC) noted that inflation is expected to remain within the target range, supported by stable food and fuel prices and a steady exchange rate. The committee explained that the slowdown in economic growth had created room for further monetary easing to stimulate economic activity while maintaining exchange rate stability.
The decision follows a call from the Kenya Bankers Association for a substantial reduction in the policy rate to encourage lower market interest rates.
Kenya’s economic performance in 2024 has been weaker than expected, and the central bank’s move aims to provide support during a period of subdued growth. The long-term effects of this rate cut remain uncertain but could offer relief to businesses and consumers in the short term.
