Kenya’s Central Bank Retains Minimum Lending Rate at 9.0%

High Market Liquidity Helps Kenya Treasury to Access Cheaper Deficit Financing

Central Bank of Kenya building

Central Bank of Kenya has retained the base lending rate at 9.0 percent arguing that there’s a need to “monitor the 2nd-round inflationary effects arising from the VAT on petroleum products” and more time to benefit from the limit set in July.

“The committee noted that inflation expectations remained well anchored within the target range, but concluded that there was need to monitor the second-round inflationary effects arising from the VAT on petroleum products and any perverse response to its previous decisions,” said Patrick Njoroge, Chairman, Monetary Policy Committee.

The Monetary Policy Committee, however, projects inflation will remain within the Government’s 7.5 percent target due to lower food prices reflecting favorable weather.

“Lower imports of food compared with 2017 are expected to moderate the impact on the current account of a higher petroleum products import bill and the expected front-loading of imports with respect to the ongoing SGR project,” said CBK Governor Dr. Patrick Njoroge.