Central Bank of Kenya Retains Benchmark Rate at 7% for the Fifth Consecutive time
The central bank Monetary Policy Committee (MPC) has retained the base lending rate at 7% in its sixth consecutive sitting Thursday.
MPC has attributed the decision to the package of policy measures implemented since March which it says were having intended effect on the economy.
“The MPC will continue to closely monitor the impact of the policy measures so far, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary. The Committee will meet again in January 2021, but remains ready to re-convene earlier if necessary,” said Dr. Patrick Njoroge, CBK Governor.
CBK expects the rate retention to continue driving credit flow to aid recovery in key sectors in the second half of the year after the real GDP contracted by an estimated 0.4% in the first half of 2020 due to COVID-19 containment measures.
“Growth in private sector credit stood at 7.7 percent in the 12 months to October. This is supported by recovery in demand with the improved economic activity following the easing of COVID-19 containment measures, and accommodative monetary policy,” Dr. Njoroge added.
The CBK says leading economic indicators (LEI) point to a continued recovery of the economy in the second half of the year from the disruptions witnessed in the second quarter which saw GDP contract by 0.4 per cent in the first half.
Manufacturing sector recorded a 7.8% growth in loan uptake, transport and communications at 21.1%, real estate 7.6%, and consumer durables at 15.7%.
However by the end of October, loans amounting to Kes. 1.38 trillion had been restructured equivalent to 46.5% total loan book of Kes 2.97 trillion as banks initiated measures to cushion borrowers from coronavirus effects.