The Monetary Policy Committee (MPC) has retained the Central Bank Rate (CBR) at 10.0 percent on the account that the overall inflation is likely to remain above the Government target range in the near term due to elevated prices for some food items.
“The MPC, therefore, decided to retain the Central Bank Rate (CBR) at 10.0 percent. The Committee will continue to closely monitor developments in the domestic and global economies, and stands ready to take additional measures as necessary,” said the statement from the Central Bank of Kenya.
According to the statement, the month-on-month overall inflation rose to 11.5 percent in April from 10.3 percent in March 2017, due to increases in food prices, notably sifted maize flour, sugar, kales (sukuma wiki) and tomatoes.
“Nevertheless, the recent rains and interventions by the Government are expected to provide some relief. Non-food-non-fuel (NFNF) inflation remained stable below 5 percent, suggesting that demand pressures and pass-through effects of high food prices are muted,” read part of the statement.
The foreign exchange market has remained stable, supported by a narrower current account deficit. Receipts from tea and horticulture are resilient despite lower export volumes due to adverse weather conditions in the first quarter of 2017. Receipts from tourism, coffee exports, and diaspora remittances have remained strong according to the CBK.
The CBK’s foreign exchange reserves are at all-time high levels. They currently stand at USD8, 235.9 million (5.4 months of import cover) compared to USD7, 716.4 million (5.1 months of import cover) at the end of March 2017. These reserves, together with the Precautionary Arrangements with the International Monetary Fund (IMF), equivalent to USD1.5 billion, continue to provide a buffer against short-term shocks.