Central Bank’s policy team meets, likely to retain lending rate at 7pc, experts say
By Noel Wandera, July 29, 2020
The Central Bank Monetary Policy Committee (MPC) is set to meet today for its interest rate decision, against the backdrop of Covid-19 shocks, with experts predicting a retention of the benchmark policy rate at 7.00 per cent.
In the previous MPC meeting held on June 25, the regulator maintained the Central Bank Rate (CBR) at 7.00 per cent.
“Overall, we expect the meeting to retain the benchmark policy rate at 7.00 pe cent,” said Gerald Kariuki, a research analyst at Genghis Capital.
Health-issue
He said Covid-19, a primarily a health-issue, is yet to be contained. With the seven-day daily average of confirmed cases edging up to 610 by Monday, from 161 – the last meeting.
“This means that the current containment measures are still in place although enhanced targeted measures have been ramped up as per the 10th Presidential address on Covid-19 pandemic,” said Muriuki.
Muriuki said the second round impact of the containment measures has impaired growth expectations (our third quarter baseline projections at -1.9%), impairing the labour market with the likelihood that 6.3 million people aged between 25 and 64 years who were working at the end of the first quarter are no longer in employment as at end of May.
First quarter
“This implies that either unemployment rate (4.9% in first quarter) or the inactive population (8.5 million in first quarter) will be reported to have trended higher in the second quarter,” Muriuki said.