CBK retains base lending rate at 7pc for third time

LOANS:  Central Bank of Kenya (CBK) has retained the base lending rate at 7 per cent for the third time in a row, saving borrowers from higher costs.

The regulator’s decision-making organ, Monetary Policy Committee (MPC), said policy measures implemented since March were having the intended effect on the economy.

Further, the policy measures will be buttressed by the measures contained in the financial year 2020/21budget, the committee said in a statement yesterday.

It retained the Central Bank Rate (CBR) at seven per cent since April when it was reduced it from 7.25 per cent so as to improve liquidity and resuscitate an economy reeling from the effect of the Covid-19 pandemic.

Policy makers

Central Bank Governor and MPC chairman, Patrick Njoroge said the Committee noted that the package of policy measures implemented since March were having the intended effect on the economy, and will be augmented by the implementation of the measures in the financial year 2020/21 Budget. 

“The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 per cent,” he added. 

The decision to retain the lending rate aligns with an earlier projection by analysts who had predicted that MPC would retain the previous rate, saying liquidity level in the economy was still high, among other factors.

Churchill Ogutu, an analyst at Genghis Capital said liquidity levels remain elevated in the banking sector.