Nairobi — The Central Bank of Kenya has maintained its benchmark lending rate at 7.00 percent, noting the policy measures adopted in March and April to tackle the effects of the coronavirus were having the intended effect on the economy, and are still being transmitted.
Wednesday's decision follows a similar one made in April when the CBK's Monetary Policy Committee first lowered the lending rate to 7 percent. A month earlier, the rate had been lowered to 7.25 percent.
"The MPC concluded that the current accommodative monetary policy stance remains appropriate and therefore decided to retain the Central Bank rate at 7:00 percent," reads the MPC statement.
The committee however left the economy's growth forecast for the year at 2.3 percent. In contrast, leading indicators of the Kenyan economy point to relatively strong GDP growth in the first quarter of 2020.
"Nevertheless, growth is expected to weaken in the second quarter, due to the adverse impact of the containment measures, particularly in transport and storage, trade and accommodation and restaurants. As a result, real GDP growth in 2020 could slow to about 2.3 percent from 5.4 percent in 2019," MPC 's chair, Patrick Njoroge said.
According to CBK Sh29 billion, of the Sh35.2 billion that was dispatched to the banking system had been used to support some of the sectors that have been hard hit by the outbreak of the coronavirus disease.
"To date, 82.6 percent of the funds have been channeled to support lending, especially to the tourism, transport and communications, real estate, trade and agricultural sectors," he added.
It also said that as a result of emergency measures it announced in mid-March, loans worth Sh170.6 billion had been restructured mainly in trade, manufacturing, tourism, and real estate.
The MPC added that it will continue monitoring the impact of the policy measures and is prepared to take additional measures if necessary.
The report comes at a time when President Uhuru Kenyatta on May 23 hinted at reopening the economy after 2 months of closure.
"We will not continue with the lockdown and the curfew, I have told health officials and my ministers that they should start telling Kenyans that we cannot be under a curfew or lockdown forever," he said.
The Ministry of Health on Wednesday announced 123 new coronavirus patients marking the highest single-day spike since the first virus case was recorded in the country on March 13, raising the country's coronavirus tally to 1,471.