The Central Bank of Kenya (CBK) has retained its benchmark lending rate at 9.0 per, meaning that borrowers have been spared from higher interest rates.
CBK’s Monetary Policy Committee (MPC) noted that inflation expectations remained well anchored within the target range, and that the economy was operating close to its potential.
MPC however noted that there is need to be vigilant on the possible effects of the recent increases in fuel prices, the ongoing demonetisation, and the increased uncertainties in the external environment.
“The MPC concluded that the current policy stance remains appropriate, and therefore decided to retain the CBR at 9.00 percent,” MPC said in a statement.
Month-on-month overall inflation remained relatively stable and within the target range in May and June 2019. The inflation rate stood at 5.7 percent in June compared to 5.5 percent in May.
However, food inflation rose to 6.6 percent in June from 6.0 percent in May, reflecting increases in the prices of non-vegetable food crops particularly maize, due to uncertain supply, MPC said.
Non-food-non-fuel (NFNF) inflation remained below 5 percent, indicative of muted demand pressures and spillover effects of the recent rise in fuel prices.
Overall inflation is expected to remain within the target range in the near term largely due to expectations of lower food prices following improved weather conditions, and lower electricity prices with the reduced reliance on expensive power sources.
The effect of the July 1, 2019, excise tax indexation is expected to have a moderate impact on inflation, noted CBK
JK/abj/APA