The MPC announcement came as a relief to borrowers with major banks lowering their base lending rates by the same margin. The MPC said it reduced the Central Bank Rate owing to stability of the local currency and steady drop in inflation rates. Inflation for the month of June stood at 10.05% down from 12.22% in May 2012.

The inflation rate has since dropped to 7.7% and market analysts predict that the MPC would lower the base rate further to protect borrowers from high interest rates charged by lenders. Other Banks that have slashed their rates following the MPCs move include Barclays, Standard Chartered, Co-op Bank, CFC Stanbic, Prime Bank and Bank of Baroda.

The state owned Consolidated Bank got approval from Capital Markets Authority for a KES 4 billion shilling bond for issue and listing in June. The bond is a seven year fixed-rate bond which will be traded in denominations of KES 100,000 with an annual interest rate of 13.25%. The first tranche of KES 1.7 billion shilling bond commenced trading at the Nairobi Securities Exchange yesterday. The bank plans to use funds raised from the bond issue on "Project financing in Real Estate, Hospitality industry, Education and expansion of small and medium enterprises