Kindiki welcomes CBK lending rate cut, says economy on recovery path
Kindiki said it showed that the country is beginning to overcome a decade of high interest rates that had weakened household incomes, slowed down private sector lending and stalled investments.
Deputy President Kithure Kindiki has welcomed the Central Bank of Kenya's (CBK) decision to lower its base lending rate, stressing that the move is a strong sign that Kenya's economy is recovering after years of turbulence.
CBK lowered its benchmark lending rate by 25 basis points to 9.5 per cent, mounting pressure on commercial banks to ease loan costs and encourage private sector borrowing.
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The move marked the seventh straight reduction in the lender's rate in the past two years, highlighting the regulator's effort to stimulate lending in an economy where credit uptake remains low.
Reacting to the decision on Monday, Kindiki said it showed that the country is beginning to overcome a decade of high interest rates that had weakened household incomes, slowed down private sector lending and stalled investments.
"Kenya has turned the corner of macroeconomic instability that had been occasioned by external and internal shocks," said DP Kindiki.
Similarly, he pointed out that key economic indicators have begun to align with projections made by the National Treasury, stressing that government reforms are bearing fruit.
Inflation, which peaked at 9.6 per cent in October 2022, has fallen steadily and is now averaging between three and four per cent. Similarly, the shilling, which had weakened sharply to Sh165 against the dollar in early 2024, has since strengthened and stabilised at around Sh129.
Kindiki also highlighted that Kenya's economy has been ranked by the International Monetary Fund as the sixth largest in Africa, overtaking Ethiopia and Angola for the first time, describing this as evidence that the country's economic reforms are being recognised globally.
However, he cautioned that despite the positive outlook, challenges still lie ahead, stressing that the real test will be ensuring government policies translate into tangible benefits for ordinary Kenyans
"With the general macroeconomic indicators on a positive trajectory, the hard work ahead involves acceleration of government policies, programmes, and projects that will boost microeconomic indicators such as household incomes, savings, and job creation," he said.
Kindiki also stressed that corruption poses one of the biggest threats to Kenya's progress, noting that without a firm and consistent strategy to root out graft, the country's economic gains could be undermined.
"Just like the war our nation has waged on poverty over the decades, an uncompromising, long-term, and non-political strategy to defeat corruption, especially grand corruption, will elevate Kenya to the first world in a generation," he said.
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