Central Bank of Kenya (CBK) held its benchmark lending rate at 9.0% on Monday, saying there was a need to remain vigilant on inflation.
“The Committee noted that inflation expectations remained well anchored within the target range, but there is need to remain vigilant on possible spillovers of recent food and fuel price increases,” said Dr. Patrick Njoroge, Chairman, Monetary Policy Committee.
This is the fifth consecutive decision by the bank to keep rates on hold since September.
The inflation rate stood at 6.6 percent in April compared to 4.4 percent in March, mainly reflecting increases in food prices attributed to the depressed supply of vegetables and other fast-growing food crops following the delayed onset of the long rains.
“Overall inflation is expected to remain within the target range in the near term largely due to expectations of lower food prices following improving weather conditions and lower electricity prices with the reduced usage of expensive power sources. Additionally, a timely release of maize stocks from the Strategic Grain Reserve will support the stability of food prices,” said the bank in a statement.
According to the MPC, the economy was operating close to its potential concluding that ‘the current policy stance remains appropriate, and will continue to monitor any perverse response to its previous decisions’.
The bank said Kenya’s growth remained resilient in the first quarter of 2019, despite the delayed onset of the long rains. Growth in 2019 is expected to be supported by agricultural production, robust growth of MSMEs and the service sector, increased foreign direct investment, and a stable macroeconomic environment.