Otiato Guguyu
The Central Bank’s rate-setting committee has spared borrowers a hike in interest on loans for the ninth month straight.
The regulator’s decision-making organ, the Monetary Policy Committee
(MPC), yesterday left the
base lending rate unchanged at nine per cent
despite a further decline in credit to the private sector. The committee
said there was a further decline in private sector credit at the
beginning of the year to 3.0 per cent in January from an average growth
of 3.4 per cent in the 12 months to February.
Central Bank Governor Patrick Njoroge, who chairs the team, said growth
in private sector credit in finance and insurance stood at 13.1 per
cent, consumer durables (16.2 per cent), manufacturing (7.7 per cent)
and trade (6.4 per cent).
Dr Njoroge, however, said the private sector credit growth is, however,
expected to strengthen this year, with the anticipated higher economic
activity and improved lending to the Micro Small and Medium Enterprises
(MSMEs).
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“The
committee stressed that interest rate caps severely constrain the
formulation, conduct and effectiveness of monetary policy. Further,
these interest rate caps have hampered access to credit by growth
sectors, particularly MSMEs,” said Dr Njoroge in a statement after the
meeting. However, businesses polled by the Central Bank say the lack of
credit posses the biggest challenge to the economy this year.
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