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Kenya central bank still retains tools to limit damage to the economy – governor says

NAIROBI July 31 (The Southern African Times) – Kenya’s central bank governor said on Thursday that policymakers still had plenty of firepower left to limit the damage to the country’s economy from the coronavirus crisis.

Policymakers cut the benchmark lending rate by a total of 125 basis points at the onset of the crisis, lowered cash reserves for commercial banks and allowed them to restructure distressed loans. 

“We have plenty of firepower … We still have plenty of those (tools). We are willing to use them as needed, if needed, but at this moment the MPC judged that it is better to wait,” Patrick Njoroge told an online news conference, referring to the bank’s decision to hold rates on Wednesday. 

Njoroge said good weather had boosted production volumes and exports of key crops like tea. 

A rebound in exports of flowers, as well as projected higher production of other crops like maize and higher production of cement, promised a quicker economic recovery than earlier anticipated, he said.

“We still think these numbers (shilling’s drop) are appropriate given the circumstances,” he said. 

The bank’s Monetary Policy Committee has gone back to meeting to review rates every two months, it said, after it started meeting every month in March because of the coronavirus crisis.

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