Nairobi — Banks are facing increasing pressure to lower interest rates after the Central Bank of Kenya (CBK) recently slashed the benchmark rate by 75 basis points to 12 percent with an aim of boosting credit uptake, which has been hindered by high borrowing costs.

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Treasury and Economic Planning Cabinet Secretary (CS) John Mbadi announced today that his ministry is collaborating with the CBK to tackle liquidity challenges in the economy.

He also stressed the critical need for affordable lending to support Kenya's economic growth and stimulate financial access for individuals and businesses.

"To further ease the tax burden on Kenyans, the National Treasury, under my stewardship, has initiated steps to reduce pressure on the lower tax cadre by promoting robust economic growth," Mbadi spoke at the Micro, Small, and Medium-sized Enterprises Exhibition sponsored by the Kenya Bankers Association (KBA) at the Kenyatta International Conference Centre.

"This is to happen through the deliberate effort of injecting more liquidity into the market, which we have started through the paying off of pending bills."

Following the recent Monetary Policy Committee (MPC) meeting, CBK Governor Kamau Thugge also implored Kenyan banks to lower lending rates to spur investment and encourage borrowing.

He emphasized that affordable loans are essential for private investors seeking to fund various ventures.

Thugge also pointed to a significant slowdown in credit growth, as high borrowing costs deter businesses and individuals from accessing loans.