SINGAPORE (Reuters) – Kenya’s scrapping of a cap on banks’ lending rates has removed one of the concerns the central bank had about cutting interest rates, its governor said on Tuesday, adding that monetary policy direction was “clear”.
Kenya’s parliament agreed last week to ditch an interest rate limit that was introduced in 2016 to curb high borrowing costs. The cap has since been blamed for choking business activity and economic growth.
Kenya - Monetary - Policy - Committee - MPC
Kenya’s Monetary Policy Committee (MPC), which is due to meet to set interest rates on Nov. 25, had previously raised concerns that if it cut rates there could be a “perverse” reaction due to the commercial rate cap.
In his first public comments since the cap was repealed, Central Bank Governor Patrick Njoroge said the MPC had more “clarity” to make its monetary policy decisions. His views are likely to bolster expectations for a rate cut later this month.
MPC - Policy - Part - Policy - Njoroge
“The MPC had signaled that they see potential for easing … monetary policy, in part because fiscal policy was being tightened,” Njoroge, who is also the chairman of the MPC, told Reuters in an interview in Singapore, where he was attending a fintech conference.
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