The Monetary Policy Committee of Kenya’s Central Bank has retained the Benchmark CBR at 9.50 percent saying overall inflation is expected to remain within the Government target range.
“The MPC noted that inflation expectations were well anchored within the Government target range, economic output was below its potential level, and there was some room for accommodative monetary policy. The Committee assessed that the policy action at its March meeting (a reduction of the Central Bank Rate by 50 basis points) was yet to be fully transmitted to the economy, including a determination of any perverse outcomes. The Committee therefore decided to retain the CBR at 9.50 percent.” read the statement from the Bank.
The bank also noted that its foreign exchange reserves remain at all-time highs. Currently, they stand at USD9,049 million (6.1 months of import cover).
“The precautionary arrangement with the International Monetary Fund equivalent to USD989.8 million, will provide an additional buffer against exogenous shocks.” CBK noted.
However, private sector credit grew slightly by 2.8 percent year on year to April 2018, compared to the 2.1 percent in February 2018.
On a positive note, lending to the manufacturing, building and construction, finance and insurance, and trade sectors grew by 10.1 percent, 14.1 percent, 10.1 percent, and 5.0 percent, respectively. However, Non Performing Loans in the real estate, trade and manufacturing sectors increased by a significant margin.
“A recent CBK survey revealed that a significant share of the NPLs was due to delayed payments from the national and county governments, and the private sector.” the Bank said.
