Central Bank tipped to cut policy rate, again
Tuesday, May 26, 2020 0:01
By CHARLES MWANIKI
Central Bank of Kenya building in Nairobi.
FILE PHOTO | NMG
The Central Bank of Kenya (CBK) is likely to cut the base rate once again by at least 25 basis points, according to economists, who point out the need to establish a base for the economic rebound in the post-Covid-19 period.
In last month’s meeting, the Monetary Policy Committee (MPC) made a 25-basis point cut in the base rate, to seven percent from 7.5 percent, which marked the fourth straight cut in the rate by the CBK going back to November 2019 meeting.
“We expect the two rate cut decisions, in addition to any anticipated cut, will primarily serve to establish a low base rate for economic recovery once business normalcy resumes and the operating environment begins to improve,” said KCB Capital in the MPC outlook note.
That said, we think that the Central Bank will reduce the policy rate by an additional 100bps this year,” said NCBA in its May monthly economic report.