The Central Bank of Kenya maintained the key interest rate at 7% for the eighth consecutive time, following yesterday’s Monetary Policy Committee meeting. According to the bank, the current rate remains appropriate even with a highly uncertain economic outlook due to the emergence of new covid19 variants, slow rollout of the vaccines, and the reintroduction of the covid19 restrictions in Kenya.
Kenya’s Monetary Policy Committee, led by the Central Bank governor Dr. Patrick Njoroge, meets every two months to set the Central Bank Rate in order to prevent the economy from overheating or slowing down too much. The central bank rate directly affects commercial banks’ borrowing costs and eventually trickles down to individual borrowers and businesses.
CBK cut the benchmark rate to 7% from 7.25% in April 2020, at the onset of the covid19 pandemic, and has retained the rate ever since.
According to the monetary policy committee, Kenya’s economy recovered in the fourth quarter of 2020 and first quarter of 2021, supported largely by the strong performance of agriculture, construction, real estate, finance and insurance, and the wholesale and retail trade. “The economy is expected to rebound strongly in 2021,” said CBK.
Sectors such as manufacturing, transport and communication, agriculture, real estate, and consumer durables registered strong credit growth in the past 12 months, indicating improved economic activity.
The global economy has improved in recent months, mainly supported by the rollout of the covid19 vaccines.
CBK’s Monetary Policy Committee said it will continue to closely monitor the developments in the local and global economy and stands ready to take appropriate measures when necessary.