CBK Lowers Lending Rate To 7.25%, Releases Ksh 35.2 Billion To Banks

By Juma / March 23, 2020 | 6:06 pm



KCB

The Central Bank of Kenya (CBK) through the monthly Monetary Policy Committee (MPC) has lowered the Central Bank Rate (CBR) by 1 percent from 8.25 percent to 7.25 percent.

“To prevent the COVID-19 health crisis from becoming a severe economic and financial crisis, the Committee has decided to lower the Central Bank Rate (CBR) to 7.25 percent from 8.25 percent.,” the CBK in a statement after the meeting.

At the same time, the CBK has reduced the Cash Reserve Ratio (CRR) to 4.25 percent from 5.25 percent, releasing 35.2 billion shillings as additional liquidity availed to banks to directly support borrowers that are distressed as a result of COVID-19.

“Additionally, CBK will ensure that the interbank market and liquidity management across the sector continue to function smoothly,” said CBK.

Overall inflation is expected to remain within the target range in the near term, reflecting lower food prices with favorable weather conditions, a decline in international oil prices and muted demand pressures.

As a result of the pandemic, economic growth is expected to decline significantly in 2020, from a baseline estimate of 6.2 percent to possibly 3.4 percent, arising from reduced demand by Kenya’s main trading partners, disruptions of supply chains and domestic production.

The fundamental concerns and anxieties center on the health impact, job losses, and duration of the crisis. The ongoing interventions by the Government are aimed at containing the pandemic and moderating the economic and social impact.

The foreign exchange market has recently experienced some volatility largely due to uncertainties with regard to the impact of COVID-19 and a significant strengthening of the US dollar in the global markets.

The current account deficit is projected at 4.0–4.6 percent of GDP in 2020, but the outcome will depend on the duration and intensity of the pandemic, and its impact on exports particularly horticulture, transport, and tourism services, and imports.

A lower petroleum product import bill is also expected to moderate the impact of COVID-19 on the current account.





About Juma

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it.(020) 528 0222 or Email: info@sokodirectory.com

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