The Governor Central Bank of Kenya (CBK), Dr. Patrick Njoroge has said CBK has been working closely with all banks in the country to raise the nation’s economic development.
Governor Njoroge said 92 percent of the banks are optimistic that the economy will improve this year, noting that last year’s inflation was within the target range referring to the most recent month-on month overall inflation in November and December 2019 as 5.6 percent and 5.8 percent respectively.
Speaking at a press conference at the CBK Building on Tuesday, the Governor attributed the slight increase in inflation to temporary effects of increase in food prices and transport costs during the festive period.
“However the foreign exchange market has remained stable, supported by the narrowing of the current account deficit and balanced flows of an estimated 4.6 percent of Gross Domestic Product in 2019 from 5 percent in 2018,” he said.
Dr. Njoroge attributed the stability to lower imports of Standard Gauge Railway-related products, resilient diaspora remittances and strong receipts from transport and tourism services.
He also recognized efforts of banks to ensure repayment of loans, through enhanced recovery efforts and write-offs, leading to decreases in Non-Performing Loans (NPLs) in the trade, real estate, financial services, manufacturing and personal/ household sectors.
The Governor also announced that the private sector credit grew by 7.1 percent from January 2019 to December 2019, especially in trade, transport, communication, and consumer durables sectors, attributing the growth to the repeal of interest rate caps, continued easing of credit risk and the deployment of innovative Micro, Small and Medium-Sized Enterprises.
He said the Monetary Policy Committee during its meeting yesterday agreed to lower the Central Bank Rate (CBR) to 8.25 percent from the previous 8.5 percent to create room for further accommodative monetary policy and support economic activity.
Dr. Njoroge said, “The committee will closely monitor the impact of this change to its policy stance”.
“Some respondents expect that the recent disruptive rainfall and the locust invasion in some parts of the country could lead to post-harvest losses and exert moderate upward pressure on food prices,” he added
By John Kinyua