CBK Governor Patrick Njoroge Photo
CBK Governor Patrick Njoroge

The Central Bank of Kenya has maintained its key interest rate for the fourth straight time, explaining that recent policy measures are having the intended impact on the economy. The monetary policy committee maintained the rate at 7%, Governor Patrick Njoroge said on Tuesday in a statement. Some of the policy measures include 150 basis points of cuts.

The Monetary Policy Committee (MPC), the policy-formulating organ of the Central Bank of Kenya, met on 29th September, 2020, against the backdrop of the global COVID-19 (Coronavirus) pandemic, and measures taken by authorities around the world to contain its spread and impact.

Mr Njoroge, who chairs the MPC, said its members assessed the outcomes of its policy measures deployed since March to mitigate the adverse economic effects and financial disruptions from the pandemic.

“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 implementation of the fiscal measures in the FY2020/21 Budget,” he said.  

“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 percent.”

He said the MPC will continue to closely monitor the impact of the policy measures so far, as well as developments in the global and domestic economy. The Committee will meet again in November 2020, but can re-convene earlier if necessary.

Key Highlights of

After the sharp contraction in the first half of 2020, there are signs of a gradual recovery in global economic activity in the second half, reflecting the impact of the lifting of containment measures and effects of the fiscal and monetary policy interventions. However, risks to the recovery remain elevated, largely due to resurgence of infections in some countries which had commenced re-opening.

Leading economic indicators for the Kenyan economy for the third quarter point to a strong recovery in economic activity from the disruptions witnessed in the second quarter of 2020. This improvement and resilience are supported by agricultural production, increased activity in key sectors particularly services with the easing of COVID-19 restrictions, normalisation of exports, and Government interventions to mitigate the impact of the pandemic.

See Also >> Earn Steady Income By Doing Business With Government

A survey of hotels by the Central Bank of Kenya (CBK) conducted between September 21 and 23 reported recovery from the COVID-19 disruptions that had led to closures in April and May. In particular, 89 percent of respondents are now open, compared to 35 percent in May. Respondents also indicated that bed occupancy and employment have been improving since May.

The MPC Private Sector Market Perception Survey conducted in September 2020, revealed a further improvement in optimism since July, with greater expectation of increased economic activity in the next two months as more sectors and businesses re-open with the lifting of COVID- 19 restrictions.

Exports of goods have remained robust despite the pandemic, growing by 0.8 percent in the period January to August 2020 compared to a similar period in 2019. Receipts from tea exports over this period rose by 17.1 percent with increased output. Horticulture exports remain strong, mainly reflecting the normalisation of demand in the international market and the availability of adequate cargo space.

Read >> Kenyans Laugh All The Way After Selling a Bank

The CBK foreign exchange reserves, which currently stand at USD8,605 million (5.22 months of import cover), continue to provide adequate cover and a buffer against short-term shocks in the foreign exchange market.

Inflation remains well anchored. Month-on-month overall inflation remained stable at 4.4% in August and July 2020, and is expected to remain within the target range in the near term. This is supported by lower food prices, the impact of the reduction of VAT and muted demand pressures.


The banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios. The ratio of gross non-performing loans (NPLs) to gross loans stood at 13.6% in August, compared to 13.1% in June. NPL increases were noted in the real estate, personal and, transport and communication sectors, due to a subdued business environment.

The Committee noted the continuing implementation of the fiscal policy measures announced in the FY2020/21 Budget, including the Economic Stimulus Programme, to stimulate the economy and cushion vulnerable citizens and businesses from the adverse effects of the pandemic.


Please enter your comment!
Please enter your name here