Kenyan central bank meets as country experiences lowest rates in eight years
The Central Bank of Kenya’s Monetary Policy Committee will meet today to assess the country’s economic response to the COVID-19 pandemic.
Last month the group cut the lending rate from 8.25% to 7.25%, its lowest level in eight years. Moreover, the Kenyan shilling fell by 5% this month amid predictions of a severe economic downturn for East Africa’s largest economy. Economic growth for the year is predicted to fall from 5.7% in 2019 to a mere 1%. With a budget deficit sitting at 6% GDP, Kenya has been facing difficulty finding loose reserves to pump into its failing industries, especially tourism and agriculture.
Expect a push for external relief efforts, as Treasury Secretary Ukur Yatani announced an effort to secure more than $1 billion in funds from the International Monetary Fund and World Bank. These demands will likely not be met in full as multiple struggling developing economies are petitioning for support from international financial institutions. Nairobi seems to be in for a prolonged recession—the economy was already slowing down before the COVID-19 pandemic. Although the government is attempting to reduce taxes and support workers’ wages, most Kenyans operate in the informal economy and have yet to have their needs be addressed.
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