NAIROBI, Kenya, Apr 30- The Central Bank of Kenya has reduced its benchmark lending rate from 7.25 percent to 7.00 percent.
The bank’s Monetary Policy Committee met on Wednesday where it noted that the policy measures adopted in March were having the intended effect on the economy.
” In light of the continuing adverse economic outlook, the MPC decided to lower the CBK rate to 7.00 percent, ” reads the MPC statement.
The regulator further revised down the country’s economic growth for the year 2020 to 2.3 percent, down from 3.4 percent growth it had projected in March.
This could be the lowest growth the country could witness since 2008 due to the post election violence witnessed in the country.
” Taking into account the recent growth projections for our trading partners, Kenya’s GDP growth in 2020 is forecast to decline sharply to about 2.3 percent,” said CBK Governor Patrick Njoroge.
According to CBK loans amounting to Sh81.7 billion have been restructured to support sectors such as the tourism hotel and restaurants which has been hit hard by the virus effects owing to movements restrictions to curb the spread of the disease.
” A special MPC private sector market perception survey in April showed that all hotel bookings for the second quarter of 2020 were cancelled, ” he added.
Currently, the government has allowed restaurants to open their doors.
Health Cabinet Secretary Mutahi Kagwe said that while Kenya looks to other countries to learn how business can reopen, the government has put measures that could keep the country safe.
Owners of eateries will be required to get their staff tested for Covid-19 and can only open their businesses once their employees have tested negative.
Credit to the private sector CBK said grew by 8.9 per cent in the 12 months to March 2020 supported by the lowering of the lending rate by commercial banks in response to the reduction in the CBR.