Kenya's central bank lowered its policy rate for the third time this year due to what it said was a "continuing adverse economic outlook," adding it is closely monitoring the impact of its recent policy measures and is "ready to take additional measures as necessary."
The Central Bank of Kenya (CBK) cut its Central Bank Rate (CBR) by 25 basis points to 7.0 percent and has now cut the rate by 150 points this year following cuts in January and March.
As the impact of these rate cuts are still being transmitted to the economy, CBK said is monetary policy committee is keeping a close eye on the global and domestic economy and will reconvene within a month.
Since May 2016, when CBK began easing its monetary policy, it has now cut its rates eight times by a total of 450 basis points.
In addition to the rate cuts, CBK also lowered its cash reserve ratio in March and said 43.5 percent of the funds released to the banking system had been used so far, mainly by the tourism, real estate, trade and agricultural sectors.
In line with CBK's additional emergency measures announced on March 18, loans amounting to 81.7 billion shilling have been restructured while fiscal measures to cushion the economy from the negative impact of the COVID-19 virus, including spending in the health sector, should result in a fiscal impulse of around 2 percent of gross domestic product in fiscal 2019-20.
CBK added that inflation is expected to remain within its target range in the near term despite the reduction in value-added-tax (VAT) to 14 percent from 16 percent, favorable weather conditions, lower oil prices, and disruptions from the pandemic.
