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CBK retains lending rate at 7 per cent, says economy rebounding

By Fredrick Obura | November 26th 2020
By Fredrick Obura | November 26th 2020
CBK Governor Patrick Njoroge (PHOTO: FILE)

NAIROBI, KENYA: The Monetary Policy Committee chaired by the Central Bank of Kenya (CBK) governor has retained the lending rate at 7 per cent arguing that policy measures taken since March are having intended effect on the economy.

In a Thursday briefing, the regulator noted the continued implementation of the Financial Year 2020/21 budget including the Economic Stimulus Programme to stimulate the economy and cushion vulnerable citizens and businesses from adverse effects of the Covid-19 pandemic.

It said the cost of living remains well anchored and is expected to remain within the target range in the near term, supported by lower food prices and muted demand pressures.

“The global economic outlook of 2020 remains highly uncertain, however business sentiment has improved with the announcement of Covid-19 vaccines, and the conclusion of US elections,” said Patrick Njoroge Chairman of the Committee.

“Leading indicators for Kenyan economy points to a recovery, resilience in our second half is continued to be supported by agriculture, a recovery in manufacturing, exports, and services following the easing of Covid-19 restrictions,” he added.

A survey of hotels and flower firms conducted by CBK between November 10 and 12 showed steady recovery from the closures and scaling down of operations in April and May following the onset of the pandemic.

According to the survey 96 per cent of the respondent, hotels are now open, compared to 89 per cent in September with increased re-engagement of employees. An average bed occupancy of 23 per cent was reported.

On the other hand, all responding flower farms indicated that they are now operational compared 56 per cent in April and May. “Respondents also indicated that orders for flower exports over the next four months are strong.

The committee also noted that the banking sector remains stable and resilient and CBK’s foreign exchange reserve continues to provide adequate cover and a buffer against short-term shocks in the foreign exchange market.

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