Central Bank of Kenya Governor Patrick Njoroge. FILE PHOTO | NMG The Central Bank of Kenya (CBK) is set to hold its monetary policy meeting on Monday at a time the economy is facing headwinds from the coronavirus pandemic.
At its last bi-monthly meeting on January 28 the MPC signalled commercial banks to cut the cost of loans after it lowered its benchmark lending rate for the second time since May 2018, nearly three months after the removal of the legal caps on borrowing charges.
The Monetary Policy Committee (MPC) cut the central bank rate by 25 basis points to 8.25 percent, noting the economy was operating below its potential.
Analysts are watching to see if the CBK will roll out extra support for the economy as most central banks are doing.
Stanbic Bank economist for East Africa Jibran Qureshi said there was a likelihood of a cut to the benchmark rate as the MPC moves to support a recovery.
“I think (there will be) another cut,” said Mr Qureshi. Mr Qureshi said concerns around weaker growth still persist “especially in light … of negative impact on economic activity.”
“It will be interesting to see if the MPC announces any other supplementary measures to support economic activity and safeguard firms from the externalities of the outbreak.”
The CBK already announced early this month it is seeking to buy Sh40.5 billion ($400 million) from banks between this month and June to increase dollar reserves amid rising uncertainties in the global market.
Researchers at NCBA project CBK will follow the US Fed slashing rates by effecting a 50 basis points cut. “Like its global peers, the central bank is taking proactive measures to minimise risks to growth from the coronavirus outbreak and other unforeseen external shocks,” it said.
They also suggested the State should fast-track talks with the IMF for a standby facility. Private sector bodies and experts have warned that Kenya’s industry is staring at a major trouble caused by the deadly coronavirus outbreak.