Kenya central bank holds main lending rate for sixth time in a row

NAIROBI: Kenya's central bank held its benchmark lending rate at 7.0% on Wednesday, the bank's monetary policy committee said, and said that measures it had put in place since March have helped mitigate COVID-19's effect on the economy.

Like other central banks worldwide, Kenya's central bank put in place a range of easing measures at the start of the coronavirus pandemic in March and April to try to contain damage to the economy caused by the crisis.

It is the sixth straight time the bank has held its rate.

Since March, the bank has cut the benchmark lending rate by a total of 125 basis points, slashed cash reserve requirements for commercial banks and allowed them to restructure distressed loans.

The central bank said commercial banks have so far restructured 1.63 trillion Kenyan shillings ($14.81 billion) in loans, equivalent to 54.2% of the total outstanding of 3.0 trillion shillings for the industry, assisting borrowers hit by the impact of the pandemic.

Like other economies worldwide, Kenya's tourism, education, transport and other key sectors have been hit hard by the COVID-19 pandemic.

The sectors have started experiencing some recovery after the government lifted some restrictions it put in place to contain the virus's spread, but they are yet to reach the levels they were before the pandemic struck.

The government forecasts the economy to grow 6.4% this year from an estimated 0.6% last year.

The central bank said it forecast the current account deficit to be 5.1% of gross domestic product this year, from 4.8% last year.

The bank said its next meeting will be in March.