Kenya’s Central Bank Maintains Benchmark Rate for Fifth Meeting

(Bloomberg) -- Kenya’s central bank held its key interest rate for the fifth straight meeting as the impact of the coronavirus pandemic in East Africa’s largest economy started easing in the second half of the year.

The monetary policy committee maintained the rate at 7%, Governor Patrick Njoroge said Thursday in an emailed statement.

Key Insights:

• As part of Covid-19 relief measures, policy makers cut rates by 1.25 percentage points and reduced banks’ cash reserve ratio to boost credit to businesses and households. The policy steps are having the intended impact on the economy, Njoroge said.
• After contracting 5.7% in the second quarter, leading economic data points to strong third-quarter recovery, according to Nairobi-based Genghis Capital. Kenya is among the world’s 10 fastest-growing economies in 2020, according to forecasts by economists compiled by Bloomberg. Its economy may grow 1% this year, according to the survey.
• The nation’s Treasury forecasts less robust expansion of 0.6%, before a rebound to 6.4% next year.

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