The Central Bank of Kenya has lowered its benchmark Central Bank Rate (CBR) by 25 basis points, bringing its one year lending rate to 8.00 per cent signaling that it hopes to keep its lending to banks at slightly lower rate to stimulate economic growth and deal with tight liquidity problems.

It is important for the government to note that though macroeconomic picture is currently not rosy, the underlying inflationary pressure should not be underestimated.

Whilst the rate cuts are at best a signal from the CBK on its intent to lower interest rates in the market, CBK ha to rationalize the government borrowing programme to keep interest rates lower. It is important to note that between inflation and growth, what hurts the poor most is the inflation. That is why we must keep inflation low.