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Experts split on key bank rate decision

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Experts split on key bank rate decision

fruits seller
A fruits seller in Molo town. A fall in the price of maize eased the cost of living in February. FILE PHOTO | NMG 

Analysts are divided over the likelihood of central bank’s rate-setting Monetary Policy Committee (MPC) keeping the benchmark number at nine per cent at its meeting scheduled for Wednesday.

During the last sitting on January 28, the MPC retained its benchmark signal rate at 9.0 percent, sparing borrowers higher cost of loans.

Two of the three analysts interviewed tipped the MPC to keep the key rate at nine per cent while one expects a cut of about 50 per cent.

Stanbic Bank Regional Economist for East Africa Jibran Qureshi said there was a likelihood of a retention noting the troubled transmission of monetary policy in the current environment but also stability of key macro-economic indicators.

“No change from us due to the risk of further perverse reaction to private sector credit growth from a cut in the rate cap environment,” said Mr Qureshi in an interview.

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“There is no need to do anything different right now. Growth is doing well and core inflation is in check.”

A fall in the price of maize, Kenya’s staple food, helped to ease the cost of living to a six-month low in February to 4.14 percent from 4.7 percent in January and 5.7 percent in December. Those who are looking at a cut cited the relative strength of shilling and low inflation.

“I am hoping for 50 basis points cut, but expecting 25 basis points cut at least,” said Deepak Dave, the founder of Riverside Capital Advisory.

“A cut would be justified, with the strength of the shilling allowing some leeway for a loosening of credit; inflation is tame given the drought; and record big bank profits showing that cost-of-money spreads are too wide.” In a pre-MPC note Commercial Bank of Africa (CBA) said it is looking at a retention citing stable inflation and exchange rate. “The stability in markets over the last couple of months reveals an economy at its ‘sweetest spot’, at least on the face of it. Inflation and the exchange rate are stable and forecasts reveal a fair level of confidence in the economy,” said CBA. “While the impact of this stability on businesses has been debatable, the enviable posture reduces pressure on the MPC to make any policy adjustments, at least in the near term.”

CBA noted that while the said macroeconomic stability may still support further easing, reduced prospects of stimulating private sector lending and potential adverse effects of a further surge in liquidity may still support a neutral call on the current stance.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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