Bank Lending Rates Fall to 13.2% as CBK Eases Monetary Policy

Average commercial bank lending rates in Kenya dropped to 13.2% in May 2024—the lowest since 2016—following the Central Bank’s shift to accommodative monetary policy. The CBK reduced the Cash Reserve Ratio and signaled potential rate cuts if inflation remains stable. Banks like KCB, Equity, and Co-op passed on savings via cheaper SME and mortgage loans. Private sector credit grew by 9.8% year-on-year, the highest in three years. The Treasury aims to further reduce borrowing costs through bond market deepening and credit guarantee schemes. Analysts say cheaper credit could boost investment in manufacturing and housing, key pillars of BETA.