More Hope in CBK’s Latest Report on Kenya’s Economy

Central Bank of Kenya Governor Patrick Njoroge during a press conference in Nairobi on May 28, 2020.
  • The Central Bank of Kenya’s (CBK) Monetary Policy Committee on Wednesday, July 29, issued its latest report of the state of Kenya’s economy.

    CBK Governor Patrick Njoroge, in his statement, revealed that the economy was showing signs of recovery with Real GDP growing by 4.9%.

    He further explained that the committee had decided to maintain the current Central Bank Rate (CBR), as it had brought about the intended positive income.

    “The committee concluded that the current accommodative monetary policy stance remains appropriate, and, therefore, decided to retain the Central Bank Rate (CBR) at 7%,” the statement reads in part.

    Central Bank of Kenya Governor Patrick Njoroge during a press conference in Nairobi on May 28, 2020.

    The Monetary Policy Committee (MPC) – CBK’s organ responsible for the formulation of monetary policy – lowered the Central Bank Rate (CBR) to 7% on April 29, to empower lenders with the ability to offer loans at a lower interest rate.

    According to the latest CBK report, the month-on-month inflation dropped to 4.9% in June 2020, compared to the 5.3% that was recorded in May 2020.

    In addition, there was a slight increase in exports of 1.7% in the first half of 2020, compared to a similar period in 2019.

    Receipts from tea exports over the period increased by 18.4% following an increase in the production levels, despite the ongoing Covid-19 pandemic.

    On the other hand, service exports declined by 20% in the first half of 2020, reflecting the impact of the pandemic on tourism and air transport.

    The CBK Governor also revealed that the imminent operationalisation of the Credit Guarantee Scheme for the vulnerable Micro Small and Medium Sized Enterprises (MsMEs) would de-risk lending by commercial banks.

    This is expected to offer a major boost to the firms that have been hit the hardest by the adverse economic effects of the pandemic.

    The latest economic projections also indicated an expected increase in economic activities over the next month, after the national government eased up on some of the restrictions put in place to combat covid-19.

    Food items on display at a market.
    Food items on display at a market.

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