central bank of kenya the technical university of kenya ( tuk ) 1 international tuk - sbms international conference st rethinking economic and business sustainability in disruptive times keynote address by dr. patrick njoroge governor, central bank of kenya thursday, november 25, 2021 as prepared for delivery good morning! i am pleased to join you at the inaugural technical university of kenya ( tuk ), school of business and management studies international conference. let me at the outset express my gratitude for the invite. the theme of the conference — rethinking economic and business sustainaibility in disruptive times — is timely, as we reflect on the challenges and opportunities that the coronavirus ( covid - 19 ) pandemic has brought to the fore. importantly, how will governments and businesses build on the lessons from the pandemic, and thereby enhance their agility to grow and thrive in a dynamic environment? i note the wide array of papers to be presented over the next two days, that will enrich the outcomes of the conference. the pandemic has upended lives and livelihoods while fundamentally changing enonomies and businesses. in kenya, a robust response from the government and private sector has served us well in containing the pandemic and ensuring business continuity. the economy is now on a steady recovery path, while the financial sector has been resilient in supporting businesses and households. we must however remain vigilant as covid is an enemy that attacks with stealth, with devastating consequences. tellingly, we have seen in recent weeks a resurgence of the virus in europe and parts of the united states, inspite of their high rates of vaccination against covid - 19. coming back to the theme of the conference, what has changed over the last one and a half years with the pandemic? and how do we rethink economic and business sustainability in disruptive times? in venturing to answer these questions, i will first highlight three recent trends in the business landscape. first, is the dominance of bigtechs. the pandemic has been characterized by accelerated digitization that enabled keeping the lights on for essential services including finance, education and health. digital payment rails for instance in kenya, rwanda, ghana and other african countries were a critical platform for official and personal transfers to the vulnerable segments of our population. more broadly, in the wake of covid - 19 containment measures, global technology platforms ( bigtechs ) offering information

2 %, three tenths of a point less than year ago estimates. meanwhile, we forecast potential growth for 2016 and 2017 between 2. 5 % and 3 %, compared with the 3 % to 3. 5 % range estimated last year for the same period. moreover, incoming figures suggest that potential growth will take longer to converge with trend growth. anyway, our assessment of the current output gap is not very different from what we foresaw a year ago. this, because although since then we have revised downward our 2016 gdp growth figure by something more than one percentage point, at the same time we lowered our estimate for potential growth and 2015 gdp growth was revised up ( figure 10 ). in recent months, financial conditions from the standpoint of borrowing costs have remained favorable. the fees charged in commercial, consumer and mortgage loans are near record lows. at the same time, growth in the stock of consumer and commercial loans has recovered from a year ago. the opposite is true of mortgage loans, which have decelerated from earlier this year. this low credit cost coincides with also low long - term interest rates. the latter responds to both the expansionary monetary policies in chile and around the world and more structural conditions ( figure 11 ). in any case, qualitative information, such as the bank lending survey for the second quarter and our august business perception report, shows that a weaker demand for credit is perceived. according to the respondents, this is due to a shortage of investment projects and job security fears. turning to our monetary policy, if the macroeconomic scenario that has been taking shape over the past few months consolidates, with external financial conditions that, while volatile, are better than we projected in june, where gaps are bounded and inflation is returning to the target a little earlier, we see no need to make any new increases in the policy rate over the policy horizon. accordingly, we use as a working assumption that the monetary policy rate will be kept unchanged during the projection horizon. as always, any monetary policy measure or adjustment to the rate will be conditional on the expected effects of incoming information on the projected inflation dynamics. some thoughts i wish to share on monetary policy conduct. for two and a half years, inflation has been above the central bank ’ s defined tolerance range. the main reason being, as we have said time and again, the increase in the exchange rate, which was necessary in the new conditions facing the chilean economy. because it was a one - time