Kenya’s commercial banks recorded the strongest expansion in private-sector lending in a year in July, reflecting the gradual impact of successive central bank interest rate cuts, Bloomberg reported.

Lending to businesses and households rose 3.3% last month, reversing a 3% contraction in January and marking the fastest pace since July 2024. The uptick comes after the central bank lowered its benchmark rate seven times over the past 13 months, cutting a total of 3.5 percentage points since August 2024.

KCB Group Plc maintained the largest loan book in the first half of the year at 1.095 trillion shillings ($8.48 billion). Diamond Trust Bank Group Plc reported the highest growth rate at 8% to 288.5 billion shillings, while NCBA Group Plc experienced the steepest decline, with loans falling 7% to 288.1 billion shillings.

Economists said the acceleration in lending reflects the delayed effect of policy easing. “It’s starting to filter through the system,” said Churchill Ogutu, an economist at IC Group. “In subsequent months we could see further uptick in private-sector credit as it filters through completely, because it works with some long and variable lags.”

Earlier in the year, the central bank dispatched officials to commercial banks to assess why lending rates were not dropping in line with the benchmark rate. Thugge acknowledged the improvement but said the central bank expects more significant growth. “We are seeing a turnaround, but I don’t think that is sufficient,” he said.