Kenya's central bank retains benchmark rate at 7 pct amid COVID-19 pandemic

NAIROBI, Nov. 26 (Xinhua) -- The Central Bank of Kenya (CBK) on Thursday retained its benchmark lending rate at 7 percent amid the COVID-19 pandemic.

Patrick Njoroge, CBK governor, who chaired the Monetary Policy Committee (MPC) meeting in Nairobi said it assessed the outcomes of its policy measures deployed since March to mitigate the adverse economic effects and financial disruptions from the pandemic.

"The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the central bank rate at 7 percent," Njoroge said in a statement.

He said the committee met against a backdrop of the continuing global COVID-19 pandemic, and measures taken by authorities around the world to contain its spread and impact.

Njoroge said that the package of policy measures implemented since March were having the intended effect on the economy, and are being augmented by implementation of the fiscal measures in the budget for the current financial year.

He said that MPC will continue to closely monitor the impact of the policy measures so far, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary.

Njoroge said that leading indicators for the Kenyan economy point to a recovery in the second half of 2020, from the disruptions witnessed in the second quarter.

He said that the gross domestic product is estimated to have contracted by 0.4 percent in the first half, reflecting the adverse impact of the COVID-19 pandemic in the second quarter on the services sector, particularly education, transport and storage, and accommodation and restaurant services.

"The contraction was partly offset by strong growth recorded in agriculture, health, information communications and technology, and the financial and insurance sectors," said Njoroge.

He said that resilience in the second half of 2020 continues to be supported by agriculture, a recovery in manufacturing, exports, and services following the easing of COVID-19 restrictions.

Njoroge said that exports of goods have strengthened from the disruptions of COVID-19, growing by 2.8 percent in the period January to October compared to a similar period in 2019 while receipts from tea exports rose by 13.2 percent during this period, largely reflecting increased output.

He said that horticulture exports have rebounded, reflecting the normalization of demand in the international market and the availability of adequate cargo space.

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