Kenya’s central bank held its benchmark lending rate at 9 percent on Monday
It’s the 3rdhold in a row and the East-African country’s policymakers say the decision was also supported by their view that the economy is operating close to its potential.
The bank’s monetary policy committee also added that Year-on-year inflation which was 5.7 percent last month was anchored within the target range of 2.5-7.5 percent
The committee, however, warned of the potential for higher volatility in the global financial markets this year, mainly due to slowing global economic growth, Brexit and a trade war between the U.S. and China.
Meanwhile, KCB Group, Kenya’s biggest bank by assets, is looking to bolster growth by joining a wave of consolidation in the country’s banking industry in the next few years
Kenyan banks are moving to consolidate in response to a 2016 cap on commercial lending rates and tougher central bank regulations which followed the collapse of three banks in 2015-2016.
The government, keen on strengthening the country’s banking sector, welcomed merger talks between NIC bank and Commercial Bank of Africa in December 2018. In 2017, Diamond Trust Bank bought Habib Kenya.
Consolidation has been triggered partly by the government’s introduction of the cap on commercial lending rates in 2016.
This was designed to help small businesses access money at affordable rates. But the cap has made banks more cautious about lending to small enterprises because they say it is more difficult to assess risk.
