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CBK policy body meets on back of pandemic to give guidance on economy

By Zachary Ochuodho
Monday, March 23rd, 2020
Central Bank of Kenya. Photo/Courtesy

Zachary Ochuodho @zachuodho

Central Bank Monetary Policy Committee (MPC) meets today to decide whether to review its base lending rate, also known as Central Bank Rate (CBR) from the current 8.25 per cent. 

The MPC meets at least once every two months and reviews data and analysis from various sources including the Central Bank departments enabling it to decide on any action to maintain or vary its stance.

Central Bank of Kenya (CBK) lowered the benchmark lending rate from 8.5 per cent in January in a move it says is aimed at  supporting economic activity. 

The meeting comes amid mixed speculations from analysts that the base lending rate could either be further cut down, stayed or raised.

The speculations are not without any basis. The team meets at a time when several fundamental issues affecting the economy call for attention from CBK.

“The issues include economic growth, foreign exchange, stability of the Kenya shilling and inflation – all which CBK team is supposed to deal with,” Renaldo D’Souza, Sterling Capital says in their brief statement. 

According to D’Souza, Kenya’s economy has not been cushioned from the impact of what is becoming a global financial crisis with economic activity especially export trade affected as is the case with movement into and out of the country.

“Inflows of capital through remittances, foreign direct investment, capital markets, particularly the equities market and tourism earnings are likely to be negatively affected,” D’Souza said.