NAIROBI, June 25 (Reuters) - Kenya’s central bank held its fire on interest rates for the second time in two months on Thursday, saying the easing measures it had adopted since the onset of the coronavirus crisis in March were working.
Policymakers, who lowered the key rate by a hefty total of 125 basis points in March and April after Kenya’s first case of the COVID-19 disease was confirmed, left it unchanged at 7.0%.
“The committee noted that the package of policy measures adopted since March were having the intended effect on the economy, and will be augmented by the announced fiscal measures,” the Monetary Policy Committee (MPC) said in a statement.
During his budget presentation on June 11, Finance Minister Ukur Yatani unveiled a stimulus package worth just over 50 billion shillings ($469.70 million), targeted at key sectors like tourism.
Like other nations across the world, the East African economy has taken a severe battering from the COVID-19 pandemic.
Commercial banks have restructured loans worth 679.6 billion shillings, nearly a quarter of the industry total, the committee said, underlining the extent of the damage to the economy.
But there were glimmers of good news, the committee said, with private sector credit growth at 8.1% in the year to May, close to its ideal growth rate of 12-15%.
Farm exports like tea and horticulture also started to rebound in May and June.
Inflation and the current account balance were expected to be stable, the MPC said, adding that the central bank held adequate foreign exchange reserves, 5.53 months worth of import cover, thus cushioning the shilling. ($1 = 106.4500 Kenyan shillings) (Reporting by Duncan Miriri; Editing by Nixk Macfie)