CBK leaves benchmark rate at 7pc amid growth optimism – KBC

The Central Bank of Kenya (CBK) Monetary Policy Committee has kept the benchmark lending rate at 7% in its meeting held on Wednesday.

According to CBK Governor Dr Patrick Njoroge, the committee noted that inflation remained well anchored within the target range and the economy continued to operate below its potential level.

It is the eighth sitting the committee is retaining the base rate in a bid support economic recovery following negative impacts as a result of the health pandemic.

MPC says inflation remains well anchored as month-on-month overall inflation reduced marginally to 5.8% from 5.9% in March of this year.

“The inflation rate is expected to remain within the target range in the near term, supported by lower food prices and muted demand pressures, despite the recent increase in fuel prices,” said Dr Njoroge.

CBK says the banking sector continues to remain stable and resilient against challenges triggered by COVID-19.

The ration of gross non-performing loans (NPLs) to gross loan stood at 14.2% in April compared to 14.5% in February.

“Repayment and recoveries were noted in the transport and communication, real estate, tourism, restaurants and hotels and agriculture sectors,” added Dr Njoroge.

Private sector credit was recorded at .8% in the 12 months to April 2021 with significant loan repayments and recoveries in March and April, noted MPC.

Transport and communication recorded credit growth of 13.3%, agriculture 10%, finance and insurance 7.6% and consumers durables 19.3%.

May has also seen a rise in loan application following a decline registered in last month.

Exports on the other hand remained strong registering a 5.5% growth in four months to April driven by higher receipts in horticulture and manufactured goods which rose 27.7% and 33.9% receptively.

The committee is still optimistic about economic rebound this year supported by growth in education, wholesale and retail trade and manufacturing.