By Reuters |
Business News
At its March meeting the committee reduced the amount of cash that
lenders are required to set aside,
unlocking Sh35.2 billion for lending.
The Central Bank of Kenya (CBK) has kept its benchmark lending rate at
7.0 per cent on Wednesday, as expected, judging that its current
accommodative stance remained appropriate, the Monetary Policy Committee
said in a statement.
The committee has cut its main interest rate by a total of 125 basis
points over two meetings to support the economy since its first case of
the new coronavirus was reported in mid-March.
“The policy measures adopted in March and April were having the intended
effect on the economy, and are still being transmitted,” the committee
said in a statement.
Banks remain stable, it said, and fiscal stimulus introduced by the
government would kick in strongly in the financial year starting in
July.
At its March meeting the committee reduced the amount of cash that
lenders are required to set aside, unlocking Sh35.2 billion for lending.
“To date, 82.6 per cent of the funds (or 29.1 billion) has been
channeled to support lending, especially to the tourism, transport and
communication, real estate, trade and agriculture sectors,” the
committee said.
Bank loans worth Sh273 billion, 9.5 per cent of the total, have also been restructured due to coronavirus-related hardships.
A Reuters poll of nine economists had forecast no change in rates, but
Razia Khan, head of research for Africa at Standard Chartered in London,
said recent pressure on the shilling might have forced the bank to
retain rates.
“Given the downside risks to the economy this year, we still expect to
see a CBR (central bank rate) at 5.0 per cent by the year end,” she
said.
The committee said there were adequate foreign exchange reserves to
cushion the country against short-term shocks, and it said fresh produce
exports, a key source of hard currency, were starting to normalize.
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