CBK Keeps Rates Unchanged Says Kenyan Economy Remains Resilient

CBK Keeps Rates Unchanged Says Kenyan Economy Remains Resilient

Wheat farming in Kenya. PHOTO I David Jones. @Cropnuts_agron

The Central Bank of  Kenya (CBK) kept interest rates unchanged at 7.00 percent noting that leading economic indicators for the third quarter-point to a strong recovery in economic activity.

The central bank said, “This improvement and resilience is supported by agricultural production, increased activity in key sectors particularly services with the easing of COVID-19 restrictions, normalisation of exports, and Government interventions to mitigate the impact of the pandemic.”

CBK said inflation remains well anchored and is expected to remain within the target range in the near term. This will be supported by lower food prices, the impact of the reduction of VAT, and muted demand pressures.

According to its MPC Private Sector Market Perception Survey conducted in September 2020, revealed a further improvement in optimism since July, with a greater expectation of increased economic activity in the next two months as more sectors and businesses re-open with the lifting of COVID-19 restrictions. 

“Other factors that contributed to this optimism included reduced COVID-19 infection rates, expected implementation of the Government’s Economic Stimulus Programme, the resilience of the agriculture sector, recovery of private sector credit growth and a rebound in consumer spending.”

“Nevertheless, uncertainties regarding a possible second wave of COVID-19 infections were noted.”