Kenya’s Finance Minister Urges Central Bank to Begin Reducing Lending Rate, According to Reuters

NAIROBI (Reuters) – Kenya’s Finance Minister John Mbadi stated on Wednesday that the central bank should consider reducing its lending rate due to a decline in inflation over the past few months.

The government aims to maintain an inflation rate between 2.5% and 7.5% in the medium term. As of September, the inflation rate dropped to 3.6% year-on-year, down from 4.4% in August and 4.3% in July.

Mbadi expressed confidence in the government’s inflation management during a Senate session, indicating that “the inflation rate is firmly under control now.” He emphasized the need for the central bank to lower interest rates to encourage the private sector to take out more loans and create job opportunities.

The central bank is expected to announce its next interest rate decision on October 8. It had previously reduced its benchmark lending rate by 25 basis points in August, citing a need for gradual policy easing as inflation fell below its target range midpoint.

The Finance Minister attributed the declining inflation rates to the strengthening of the shilling and the earlier tight monetary policy implemented by the central bank.