Kenya’s Central Bank, the guard dog that won’t bite
- The Central Bank of Kenya has cut the central bank rate from 13% to 9.5% since October 2024.
- Commercial banks have only reduced their lending rates from 17.2% to 15.2%, which is insufficient for small businesses.
- CBK Governor Kamau Thugge has expressed frustration over banks' slow response to rate cuts.
The ongoing struggle between the Central Bank of Kenya and commercial banks highlights a significant disconnect in the financial ecosystem. While the CBK aims to stimulate the economy through lower borrowing costs, banks are hesitant to comply due to concerns over their financial stability. This situation raises questions about the effectiveness of regulatory measures and the need for a more collaborative approach to ensure that rate cuts benefit the intended borrowers.
