CBK leaves the benchmark lending rate unchanged again

The Central Bank of Kenya (CBK) has left the benchmark lending rate unchanged at seven per cent for the eighth time in a row.

The reserve bank which held its bi-annual Monetary Policy Committee (MPC) meeting on Wednesday notes current policies continue to be accommodating to economic rebound conditions.

“Leading  tindicators for the Kenyan economy pointo a relatively string recovery in the first quarter of 2021, supported by a strong performance of agriculture, construction, information and communication, real estate, finance and insurance sectors,” the CBK noted.

Similarly, exports have remained strong registering a 4.4 per cent growth rate in the first four months of 2021 compared to a similar period last year supported largely by horticulture and manufactured goods receipts.

Additionally, the CBK projects inflation to remain well anchored within the government target range of 2.5 to 7.5 per cent supported by lower food prices and muted demand pressures.

During the month CBK’s MPC conducted three market surveys which revealed general optimism about 2021 economic prospects.

The growth optimism has been attributed to the roll-out of vaccines and the gradual resumption of normalcy with the easing of containment measures.

Nevertheless, private sector credit has collapsed to just 6.8 per cent in 12 months to April, its lowest count since October 2019.

However, the ratio of banks non-performing loans has improved to 14.2 per cent from a higher 14.5 per cent in February.