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CBK retains benchmark lending rate at 7pc, seventh time in a row

NAIROBI, Kenya, Mar 30- The Central Bank Of Kenya has retained the benchmark lending rate at 7 percernt, for the seventh time.

Central Bank of Kenya boss Patrick Njoroge through the Monetary Policy Committee statement said the decision was influenced by the fact that the current accommodative monetary policy stance remains appropriate.

Njoroge added that the country’s economy will rebound strongly in 2021 influenced by a strong growth in sectors such as education known to be economic drivers, where the recovery process started in the fourth quarter of 2020.

“The economy recovered in the fourth quarter of 2020 and first quarter of 2021. This recovery is supported largely by strong performance of agriculture, construction, real estate, finance and insurance, and the wholesale and retail trade,” said Njoroge.

“The economy is expected to rebound strongly in 2021, supported by recovery in the services sector particularly education and the wholesale and retail trade. This recovery will be anchored on the success of the containment measures and the vaccination programme, including the measures announced on March 26,” he added.

Consequently, over the last one year, loans amounting to Sh1.7 trillion were restructured.

The outstanding restructured loans as at the end February amounted to Sh.569.3 billion.

Additionally, the lowering of the Cash Reserve Ratio in March 2020 has so far injected Sh32.8 billion to support lending, and the Credit Guarantee Scheme for the vulnerable Micro Small and Medium-sized Enterprises has been operationalized.

According to CBK, these measures were assessed to be highly effective in providing the intended relief to borrowers.

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At the same time, growth in private sector credit has increased to 9.7 percent in the 12 months to February 2021, reflecting a recovery in demand with improved economic activity.

Strong credit growth was observed in the following sectors: manufacturing (15.8 percent), transport and communications (19.0 percent), agriculture (13.4 percent), real estate (8.8 percent) and consumer durables (20.3 percent).

“The MPC will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary,” reads the MPC statement.



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