Market Data 
By George Obulutsa
NAIROBI (Reuters) -Kenya’s central bank slashed its benchmark lending rate to 12.00% from 12.75% on Tuesday, in a move aimed at stimulating credit to the private sector, the bank’s monetary policy committee (MPC) said in a statement.
The cut follows a 25 basis-point reduction in August, the first in approximately four years. The bank also trimmed its economic growth forecast for 2024, citing a slowdown in the second quarter.
“The MPC … noted the sharp deceleration in credit to the private sector, and the slowdown in growth in the second quarter of 2024, and concluded that there was scope for a further easing of the monetary policy,” the bank said in a statement.
Last week, Finance Minister John Mbadi said the central bank should start lowering its lending rate due to falling inflation in recent months.
Inflation fell to 3.6% year-on-year in September from 4.4% a month earlier. It stood at 4.3% in July, well within the government’s preferred band of 2.5%-7.5%.
Prior to the rate decision, Kenya Bankers’ Association said in a research note on Oct. 3 that there was room for the bank “to effect a decisive policy rate cut” to support stronger economic growth by pushing for a recovery in growth of private sector credit.
The bank cut its growth forecast for 2024 to 5.1% from 5.4% following slower growth in the second quarter, which came in at 4.6% year-on-year from 5.6% in the same quarter a year earlier. But it expects the economy to grow 5.5% in 2025.
“The resilience of key service sectors, robust performance in agriculture and improved exports are expected to continue supporting growth,” it said.
Kenya’s shilling currency is up more than 21% against the dollar this year, after a rally that started in February when the government sold a new $1.5 billion Eurobond to buy back most of a $2 billion bond whose maturity in June had shaken investors.
The central bank said it had adequate foreign exchange reserves, at $8.25 billion, to buffer against any short-term shocks in the foreign exchange market.
