The central Bank of Kenya (CBK) is likely to raise its bench mark lending rate from the current 10 per in a bid to address the soaring inflation rate that currently stands at 11.48 per cent when it meets today
The bimonthly meeting by the Monetary Policy Committee (MPC) which maintained the CBR rate at 10 per cent when it last met in March is also under pressure from the local banks which have recorded profit losses since the enactment into law of the Banking Amendment Act 2015, which capped the interest rates at 4 per cent above the CBR.
Banks are blaming the decline of private sector credit growth to the controversial act
Although the inflation rate in the country was high when the committee last met in March, it based its decision to retain the CBR rate on stable shilling and banking stability-some of key indicators of a favorable economy
However, many companies have since retrenched, banks recorded profit losses and high food prices, aspects that may force MPC to reconsider its decision
In the last session, CBK Governor Patrick Njoroge said the Committee will continue to closely monitor developments in the domestic and global economies, and stands ready to take additional measures as necessary.
Even though stakeholders in the banking sector are pushing for the repeal of the Banking Amendment Act 2015, the government is adamant that no changes will be effected anytime soon.
The state recently asked banks to develop business models that would ensure that they remain competitive in the new environment, closing any hopes of revisiting the banking act