NAIROBI, Kenya, Oct 16 — Treasury and Economic Planning Cabinet Secretary John Mbadi has announced that his ministry is accelerating efforts to address liquidity challenges by collaborating with the Central Bank of Kenya (CBK) to lower exchange rates.
In a statement, Mbadi emphasized the importance of affordable lending, which he believes will significantly impact the country’s economic growth.
“To further ease the tax burden on Kenyans, the National Treasury, under my leadership, has taken steps to reduce pressure on the lower tax bracket by promoting robust economic growth,” Mbadi stated.
“This will be achieved through deliberate efforts to inject more liquidity into the market, a process we have initiated by paying off pending bills.”
Lower rates
His comments follow CBK Governor Kamau Thugge’s call for Kenyan banks to lower lending rates to encourage investment and increase borrowing.
Thugge highlighted that more affordable loans are crucial for private investors looking to finance various ventures.
Earlier, on October 8, 2024, CBK’s Monetary Policy Committee (MPC) reduced its base lending rate by 75 basis points, lowering it from 12.75 per cent to 12 per cent.
The move was in response to declining inflation, which fell to 3.6 per cent in September, down from 4.4 per cent in August.
“The MPC noted that overall inflation has continued to decline and is expected to remain below the midpoint of the target range in the near term, supported by stable food inflation due to improved supply from ongoing harvests, a stable exchange rate, and lower fuel inflation,” Governor Thugge said.
Despite this positive outlook, the CBK also highlighted a noticeable slowdown in credit growth, as high borrowing costs continue to discourage businesses and individuals from taking on loans.
Credit slowdown, combined with reduced economic growth in the second quarter of 2024, has heightened the urgency for the recent rate cut to stimulate borrowing and revive economic activity.
Source: capitalfm
