Central Bank of Kenya cut its policy rate on Tuesday for the fifth meeting in a row, a surprise move aimed at further stimulating private sector lending.

The Central Bank Rate was lowered by 75 basis points to 10.0 per cent, the bank’s Monetary Policy Committee said in a statement. Seven of nine economists polled by Reuters had expected no change in the rate.

“The committee concluded that there was scope for a further easing of the monetary policy stance to stimulate lending by banks to the private sector and support economic activity,” the statement said.

The bank also reduced the width of the interest rate corridor around the benchmark rate to plus or minus 75 basis points from plus or minus 150 basis points.

“This will enhance stability of the interbank rate and align the rate closer to the Central Bank Rate,” it said.

The central bank also cut the applicable interest rate on the discount window to 75 basis points above the benchmark rate from 300 basis points.

The discount window is the rate the bank charges commercial banks wishing to borrow on an overnight basis.

Kenya’s annual inflation stood at 3.6 per cent in March, slightly up from 3.5 per cent a month earlier but still well within the 2.5 per cent to 7.5 per cent target range.

• A Reuters report