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Economy

Bank customers to know fate of rate cap in Jan

The CBK has said it will hold its next Monetary Policy Committee (MPC) meeting on January 30. PHOTO | FILE
The CBK has said it will hold its next Monetary Policy Committee (MPC) meeting on January 30. PHOTO | FILE 

Bank customers will on January 30 know if the Central Bank of Kenya (CBK) will for the first time review lending rates under the interest control regime.

The CBK has said it will hold its next Monetary Policy Committee (MPC) meeting on January 30 to set its benchmark Central Bank Rate (CBR).

The bank held the rate at 10.0 per cent at its last meeting in November, sparing consumers high costs of loans.

A law that came into effect in mid-September capped commercial loan rates at 400 basis points above the benchmark rate—meaning the maximum rate on bank loans remains 14 per cent.

There had been concerns in November the CBK might be pushed to tighten monetary policy by raising the CBR in response to a weakening shilling — that has now hit a nine-month low of 102 units to the dollar — and rising inflation, which stood at an eight-month high of 6.5 per cent in October.

The shilling is currently trading at Sh102.30 and inflation has weakened further to 6.68 per cent.

The MPC in November said it expects the inflation rate to remain within 2.5 and 7.5 per cent target, while adding that it was too early to determine the impact of the interest rate cap on bank lending and deposits on monetary policy and overall economy.

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