The Central Bank of Kenya (CBK) through the Monetary Policy Committee (MPC) has retained the Central Bank Rate (CBR) at 7 percent in the wake of the Covid-19 spike in Kenya.
“The MPC concluded that the current accommodative monetary policy stance remains appropriate,” said Governor to Central Bank Dr. Patrick Njoroge in a statement after the meeting.
According to CBK, the global economic outlook for 2020 remains highly uncertain as a result of Covid-19. Covid-19 has impacted negatively on global economies leading to what analysts are calling a “historic recession.”
Despite the Covid-19 pandemic, CBK says that Kenya’s economy remained resilient during the first quarter of 2020. The banking sector regulator says the real GDP during the first quarter grew by 4.9 percent mainly supported by the increased production in the agricultural sector.
The month-to-month overall inflation rate declined to 4.6 percent during the month of June from 5.3 percent during the month of May 2020. CBK says the inflation rate is expected to remain within the target range.
CBK says the Kenyan banking sector has remained strong and resilient in the face of the pandemic. “The ratio of gross non-performing loans to gross loans stood at 13.1 percent in June compared to 13.0 percent in May,” says CBK.
At the same time, Kenyan commercial banks have restructured a total of 844.4 billion shillings in loans since the month of March. When Covid-19 broke out, the government and CBK called on Kenyan banks to be lenient on their customers by giving them time to pay back through the restructuring of loans.
“The restructured loans are 29 percent of Kenyan banking sector loan book of 2.9 trillion shillings recorded during the month of June in line with the emergency measures announced by CBK in March,” said CBK in a statement.
“The Committee noted that the package of policy measures implemented since March were having the intended effect on the economy,” said CBK.