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CBK to hold rate-setting meeting on May 27

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The Kenyan central bank’s Monetary Policy Committee will hold its next rate-setting meeting on May 27, it said on Friday.

At its April meeting, the bank cut its benchmark lending rate to 7.0% from 7.25%, saying action to cushion the impact of the coronavirus was having an effect, but the bank needed to do more, due to the adverse economic outlook.

That benchmark rate was a near nine-year low of seven percent in efforts to boost flow of cheap loans in an economy plagued by the coronavirus pandemic and a pointer of policy bias towards cheaper loans in an environment where the government is not controlling cost of credit.

Banks already have cut the cost of credit to the lowest level in 15 years following the drop in the benchmark rate and a reduction in demand for new loans, cutting average borrowing costs to 12.19 percent in February.

The bank’s monetary policy committee said in a statement it forecast economic growth of 2.3 percent this year, down from its March forecast of 3.4 percent, and from its estimate of 6.2 percent earlier this year, in the wake of coronavirus.

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