The Central Bank of Kenya (CBK) through the Monetary Policy Meeting (MPC) has retained the Central Bank Rate (CBR) at 7.00 percent as it continues to monitor the impact of Covid-19 on the economy.
“The Committee noted that the package of policy measures adopted since March were having the intended effect on the economy, and will be augmented by the announced fiscal measures. The MPC concluded that the current accommodative monetary policy stance remains appropriate,” said CBK.
According to CBK, 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 stand ready to take additional measures as necessary.
The global economic outlook for 2020 has deteriorated further and remains highly uncertain. GDP across advanced economies is expected to contract more sharply in the second quarter than had been projected in April, following severe disruptions to trade and supply chains and the collapse in global travel.
A more gradual recovery in global growth is expected in the second half of 2020, with the lifting of containment measures in several countries. However, risks to the recovery remain elevated particularly with regard to the severity and persistence of the pandemic across countries. Financial market volatility has moderated, but risks of further
instability remain.
Most recent leading indicators for the Kenyan economy point to strong growth in the first quarter of 2020. The indicators for the second quarter suggest that the impact of COVID-19 on the economy was most pronounced in April, with evidence of recovery in May supported by improved agricultural output and exports, although the services sector remains subdued.
The measures by the Government to cushion businesses and households continue to moderate the impact of the pandemic.
Overall inflation is expected to remain within the target range in the near term. This is supported by improving food supply due to favorable weather conditions, lower international oil prices, the impact of the reduction of VAT, and muted demand pressures.
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