Kenya’s central bank is making it easier for businesses to borrow to stimulate investments in response to the growing economic devastation from the coronavirus pandemic.
The central bank on Wednesday decided to ease monetary policy, by lowering the Central Bank Rate (CBR) to 7.00 percent from 7.25 percent.
“The Committee noted that the policy measures adopted in March were having the intended effect on the economy, and are still being transmitted. However, in light of the continuing adverse economic outlook, the MPC decided to augment its accommodative monetary policy stance,” Dr Patrick Njoroge, Central Bank Governor said.
The regulator said policy measures adopted in March where it resolved to lower the Central Bank Rate (CBR) and the Cash Reserve Ratio (CRR), their effects are being felt and are still being transmitted.
“As a result of the reduction in CRR in March, 43.5 percent of the funds released to the banking system have been utilized so far, with the tourism, real estate, trade and agriculture sectors being the main beneficiaries.”
Private sector credit grew by 8.9 per cent in the 12 months to March 2020 supported by the lowering of the lending rate by commercial banks in response to the reduction in the CBR.
“Improvement in liquidity and credit market conditions following the reduction in the Cash Reserve Ratio deployed in March also supported access to credit and loan repayments by customers that were distressed as a result of Covid-19,” Njoroge said.
“The MPC will meet again in a month and stands ready to take additional measures as necessary,” Njoroge said.