Kenya retains benchmark lending rate at 7 pct

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NAIROBI, June 25 (Xinhua) -- The Central Bank of Kenya (CBK) on Thursday retained its benchmark lending rate at 7.0 percent because the packages of policy measures aimed at combating the effects of COVID-19 adopted since March were having the intended effect on the economy.

Patrick Njoroge, CBK governor, who chaired the Monetary Policy Committee (MPC) meeting in Nairobi said that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the rate.

"The 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 in a statement issued in Nairobi.

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

Njoroge said the monetary policy organ assessed the outcomes of its policy measures that have been deployed since March to mitigate the adverse economic effects and financial disruptions.

According to the apex bank, the global economic outlook for 2020 has deteriorated further and remains highly uncertain with the gross domestic product (GDP) across advanced economies expected to contract more sharply in the second quarter than had been projected in April, following severe disruptions to trade and supply chains and the collapse in global travel.

The governor added that the most recent leading indicators for the Kenyan economy point to strong growth in the first quarter of 2020.

"The indicators for the second quarter suggest that the impact of COVID-19 on the economy was most pronounced in April, with evidence of recovery in May supported by improved agricultural output and exports, although the services sector remains subdued," Njoroge said.

The CBK noted that the measures undertaken by the government to cushion businesses and households continue to moderate the impact of the pandemic.

Njoroge revealed that the banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios while the ratio of gross non-performing loans to gross loans stood at 13.0 percent in May compared to 13.1 percent in April.

The apex bank said that following the weak performance of exports in April, a significant rebound was observed in May and so far in June.

The governor added that horticulture exports are almost at normal levels, mainly due to a pickup in demand and easing of supply restrictions in key destination markets and increased cargo capacity. Enditem

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