CBK retains benchmark lending rate, says economy to grow at 2.3pc

Thursday, May 28th, 2020 00:00 |
CBK governor Patrick Njoroge. Photo/File

 Noel Wandera @NoelWandera5

Central Bank of Kenya (CBK) has revised this year’s gross domestic product (GDP) growth to 2.3 per cent on the back of Covid-19 pandemic.

CBK governor Patrick Njoroge attributed the revised growth to adverse impact of containment measures the government has instituted to mitigate the spread of the virus particularly in transport and storage, trade and accommodation and hospitality.

“As a result, real GDP growth in 2020 could slow to about 2.3 per cent from 5.4 per cent in 2019,” said Njoroge.

Njoroge issued the statement after a Monetary Policy Committee (MPC) meeting yesterday.

MPC retained the Central Bank Rate (CBR) at seven per cent, noting that the policy measures adopted in March and April were having the intended effect on the economy, and are still being transmitted.

Monetary stance

“The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore, decided to retain it,” said Njoroge.

Overall, Njuguna said inflation was expected to remain within the target range in the near term. 

This, he said, was supported by improving food supply due to favourable weather conditions, lower international oil prices, the impact of the reduction of value added tax and muted demand pressures.

Njoroge said the global economic outlook in 2020 had deteriorated further and remained highly uncertain.

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