Relief as bank lending rates set to come down

The high interest rates in the Kenyan market are expected to come down following an announcement by the Central Bank of Kenya that the liquidity conditions in the country have improved.

In a statement, CBK governor, Dr Patrick Njoroge said a notable improvement has been recorded this month, with the interbank and Treasury bill rates declining to single digit levels.

This was after the government received a Sh77 billion syndicated loan a fortnight ago to stem increased domestic borrowing.

It is against the backdrop of these developments that the Central Bank’s Monetary Policy Committee has opted to keep the CBK’s benchmark lending rate unchanged at 11.5 percent for the fifth consecutive month.

Commercial banks are now expected to lower their lending rates.

Kenya’s high interest rate environment had been an issue of great public concern over the last two months after lending rates shot up to levels of up to 27 percent following a sharp rise in Treasury bill rates that saw the government’s short-term borrowing rate soar to 22 percent, amid a cash crunch.

However, concerns abound over the likely impact of an expected interest rate hike in the US economy after a nine-year wait.

That’s because the US dollar is expected to strengthen further against other global currencies such as the Kenyan shilling, which has taken a beating from the dollar since the beginning of this year.