- Citizen Digital
The move by the Central Bank of Kenya to lower its lending rate to 7.25 % from 8.25 % to cushion borrowers from the effects of Coronavirus has raised the suspicion of Gatundu South MP Moses Kuria.
In a statement on his social media platforms on Monday, March 23, Kuria dismissed the move by CBK as a temporary measure that would not help Kenyans in the long run, given the looming lockdown.
"I have been asking the CBK governor to lower the Central Bank Rate to 5% and the Cash Reserve Ratio to 2% in order to shield the economy from collapsing as a result of Coronavirus.
"Today Governor Njoroge has reduced the CBR rate from 8.25% to 7.25%. This is a good development but not enough to mitigate, especially with a looming lockdown," Kuria wrote.Deputy President William Ruto (left) with Gatundu South MP Moses Kuria at a private wedding at Greens Golf Resort, Thika on Friday, November 29, 2019.
The vocal legislator further dismissed the decision by CBK to release Ksh32 billion to the the private lenders to boost their liquidity.
"This is a Sungura Mjanja (devious) tactic to avoid cutting the Cash Reserve Ratio (CRR). It is a weird methodology of arbitrariness that will not help the economy in the long term," he wrote.
"I call upon the governor to be bold enough to reduce the Cash Reserve Ratio to 2% so that the banks will have no option but to give the loans to SMEs. I miss Kibakinomics (economic policies during retired President Mwai Kibaki's tenure)," Kuria added.
The Central Bank's Monetary Committee met on Monday, March 23, and informed that the global economic outlook is uncertain, but did not reveal the extent of the adverse effects on the Kenyan economy.
The Monetary Policy Committee decided to reduce the Cash Reserve Ratio (CRR) to 4.25% from 5.25%, releasing Ksh35.2 billion as additional liquidity availed to banks to directly support borrowers that are distressed as a result of Covid-19.
The CBK further promised to ensure that the interbank market and liquidity management across the banking sector continues to function smoothly even in the wake of COVID 19.
"The MPC will closely monitor the impact of this change to its policy stance, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary," the regulator stated in a statement sent to newsrooms.Central Bank of Kenya (CBK) building in Nairobi.Simon KiraguKenyans.co.ke
Cash Reserve Ratio (CRR) is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves either in cash or as deposits with the central bank. CRR is set according to the guidelines of the central bank of a country.
The aim here is to ensure that banks do not run out of cash to meet the payment demands of their depositors.
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