The Central Bank of Kenya (CBK) held its interest rate at 13%, citing the easing of Inflation and the appreciation of the Kenyan shilling against major global currencies.
On Wednesday, the Monetary Policy Committee of the CBK noted that headline inflation eased to 5.7% as the costs of most food items, including maize flour, wheat flour, kale, spinach, and cabbages, declined.
“However, the economy continues to be under inflationary pressures, with fuel prices remaining high relative to global fuel prices, despite the ongoing appreciation of the Kenyan shilling, which gained by 15.8% against the US Dollar to close the quarter at Kshs 131.8 from Kshs 156.5 recorded at the end of 2023,” Cytonn Investments noted in its Cytonn Quarterly MarketsReview Q1 ‘2024.
The Kenyan shilling was the largest gainer against the dollar year-to-date, gaining by 16.0% to close at Kshs 131.8 at the end of March, up from Kshs 157.0 recorded at the beginning of the year.
During the quarter, the shilling was supported by increased dollar inflows into the country following the IMF funding and increased activity in the international bond markets, which boosted the country’s foreign reserves.
“The MPC noted that its previous measures have lowered inflation, addressed the exchange rate pressures, and anchored inflationary expectations.”
“Therefore, the MPC concluded that the current monetary stance will ensure that overall inflation continues to decline towards the 5.0 per cent midpoint of the target, and thus decided to retain the Central Bank Rate (CBR) at 13 per cent,” CBK said in a statement on Wednesday.
