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CBK Governor Dr. Patrick Njoroge/CFM


CBK Maintains Benchmark Lending Rate at 7pc for Fourth Time in a Row

NAIROBI, Kenya, Sep 29The Central Bank of Kenya has maintained its benchmark lending rate at 7.00 percent fourth time in a row noting that the current accommodative monetary policy stance remains appropriate.

MPC through a statement on Tuesday said that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 percent.

CBK first lowered the rate to 7 percent in April this year.

According to the bank regulator, the banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios.

The ratio of gross non-performing loans (NPLs) to gross loans stood at 13.6 percent in August, compared to 13.1 percent in June.

NPL increases were noted in the real estate, personal and, transport, and communication sectors, due to a subdued business environment.

At the same time, CBK revealed that as a result of emergency measures it announced in mid-March to cushion Kenyans from the harsh economic environment occasioned by the coronavirus disease, personal loans worth amounting to Sh271 billion had been restructured.

Other sectors such as trade, manufacturing, real estate, and agriculture were offered relief of loans that amount to Sh849.9 billion.

In line with this, total loans amounting to Sh1.12 trillion have been restructured which represents 38 percent of the total banking sector loan book of Sh2.9 trillion by the end of August.

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Njoroge added that of the Sh35.2 billion that was released by the lowering of the Cash Reserve Ratio in March, Sh32.4 billion has been used to support lending, especially to the tourism, trade and transport and communication, real estate, and manufacturing sectors.

Private sector credit growth meanwhile in the 12 months to August, stood at 8.3 percent, supported by continued recovery in demand from the COVID-19 related disruptions and the accommodative monetary policy.

The Committee noted the continuing implementation of the fiscal policy measures announced in the FY2020/21 Budget, including the Economic Stimulus Programme, to stimulate the economy and cushion vulnerable citizens and businesses from the adverse effects of the pandemic.

The MPC added that it will continue to closely monitor the impact of the policy measures so far, as well as developments in the global and domestic economy, and stand ready to take additional measures as necessary.

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