- The CBK has cut the rate twice this year from 8.25 to 7.25 in January and down to seven per cent in April, arguing this had helped boost private sector credit.
The Central Bank of Kenya (CBK) is likely to retain its benchmark lending rate at seven percent when its Monetary Policy Committee meets next Thursday, analysts said.
The analysts agree that the CBK rate-setting team is likely to remain neutral as they take a wait-and-see approach over fears of a second corona wave.
“We expect the MPC to take a wait-and-see approach to monitor economic developments as reported Covid-19 cases escalate. A policy rate cut is unlikely at this point in time and might be ineffective in increasing private sector credit due to poor asset quality,” said Sterling Capital in a research note.
The CBK has cut the rate twice this year from 8.25 to 7.25 in January and down to seven per cent in April, arguing this had helped boost private sector credit.
Genghis Capital research head Churchill Ogutu said although data showed credit to the private sector had been strong when the regulator made two cuts, part of it may have been supported by coronavirus relief measures when CBK lowered the Cash Reserve Ratio (CRR).
“If you look at actual credit it is not as robust I think it increased by Sh105 billion, including the lowering of CRR which injected Sh32.4 billion while last year it stood at Sh128 billion,” he said.