The Central Bank of Kenya (CBK) on Monday signaled commercial banks to cut their lending rates after it lowered its benchmark lending rate for the first time since May 2018 and weeks after the removal of the legal caps on borrowing charges. CBK's Monetary Policy Committee, sitting for the first time since Kenya lifted a cap on commercial interest rates on November 7, cut the CBR rate to 8.50 percent from 9.0 percent, saying the economy was operating below its potential. The lowering of the rate is expected to signal banks to cut lending rates to boost the supply of credit and put money in hands of consumers to increase demand for goods and services incorporate Kenya that is cutting jobs on lower sales. CBK says credit to the private sector grew 6.6 percent in the year to October, compared to seven percent in the 12 months to September -- which are both below the ideal growth level of between 12 and 15 percent. "The committee noted the ongoing tightening of fiscal policy and concluded there was room for accommodative monetary policy to support economic activity," said Dr. Patrick Njoroge, the CBK Governor and chair of the committee. Banks, which are yet to review the lending rates after the removal of the caps, can ignore the CBK signal to lower loan charges in an environment where the State is not controlling borrowing costs. Mr. Habil Olaka, the CEO of Kenya Bankers Association -- the bankers' lobby -- reckons that lenders will consider other tools beyond the benchmark rate when pricing their loans, including government borrowing -- which influences the cost of long term deposits that affect borrowing rates.