NAIROBI, Kenya, Jul 29-The Central Bank of Kenya has retained its benchmark lending rate at 7 percent noting that the current monetary policy measures remain appropriate.
The banks’ regulator which held its Monetary Policy Committee on Wednesday said that leading indicators for the Kenyan economy point to a relatively strong GDP recovery in the first half of 2021.
“The economy is expected to rebound in 2021, supported by the continued reopening of the services sectors including education, recovery in manufacturing, and stronger global demand,” reads the MPC survey.
The committee also cited that inflation expectations remained well anchored within the target range, and the economy however continued to operate below its potential level in the period under review.
The MPC’s survey also noted that the banking sector remained stable and resilient, with strong liquidity and capital adequacy ratios.
In the period under review, the ratio of gross non-performing loans (NPLs) to gross loans stood at 14.0 percent in June compared to 14.2 percent in April.
Repayments and recoveries were noted in the manufacturing, agriculture, trade, and real estate sectors.
At the same time, leveraging on accelerated digitalization, banks have continued to roll out innovative products targeting underserved segments including women, youth, and Micro, Small, and Medium Size Enterprises (MSMEs).
Meanwhile, the Committee noted the improved revenue performance in FY2020/21 and a provisional fiscal deficit of 7.8 percent of GDP.
Additionally, the rollout of the FY2021/22 Budget was noted, including the Economic Recovery Strategy which is expected to support domestic demand.
Consequently, private sector credit growth rebounded having increased from 6.8 percent in April increased to 7.7 percent in June 2021.
CBK says it 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.
The Committee will meet again in September 2021 but remains ready to re-convene earlier when the need arises.
