The Kenyan economy has sustained shocks of the global CoronaVirus pandemic remaining resilient in the first quarter of 2020. The real GDP grew by 4.9% in comparison to the same period under review in 2019.
In a statement sent to newsrooms, the CBK noted favourable weather conditions and the lifting of restrictions in key export market played a significant role in the resurgence. This was among the key decisions in maintaining the Central Bank Rate at 7 percent, with an accomodative monetary policy stand.However, against a backdrop of disruptions from the COVID-19 containment measures, service sectors remain subdued, particularly hotels and restaurants, and the education sector.
On July 27, President Uhuru Kenyatta ordered a shutdown on bars, restaurants and hotels for 30 days to contain the spread of the CoronaVirus.
In the previous meeting held on the June 25th this year, the committee decided to reconvene within a month for an early assessment of the impact of the measures already in place, and the evolution of the pandemic.
In its last sitting, the Monetary Policy Committee maintained the CBR at seven per cent, citing that the accommodative policy stance adopted in March, April and May sittings, which saw a cumulative 125 basic points cut was having the intended effects on the economy.
On the other hand, the inflation rate remained anchored with the Month-on-Month overall rate declined to 4.6 percent in June from 5.3 percent in May. According to the financial sector regulator, this is excepted to remain supported by lower food prices, the impact on the reduction of VAT and muted demand pressures.
Globally, the economic outlook remains sketchy reflecting on the severity and persistence of the pandemic. The MPC noted after a sharp decline in the first half of the year, global economic activity is expected to witness a gradual recovery, mainly brought about through the lifting of lockdown restrictions.
CBK Governor Dr. Patrick Njoroge indicated that the package of policy measures implemented in March were having the intended effects on the economy, and will be augmented by the implementation of the measures in the FY 2019/20 budget.