Central Bank Rate Retained At 7.00 Percent

The Central Bank Rate (CBR) has been retained at 7.00 percent by the Monetary Policy Committee.

“The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 percent,” said the Committee in a statement.

According to MPC, the overall inflation declined to 6.5 percent in October 2021 from 6.9 percent in September, mainly due to lower fuel prices.

Fuel inflation declined to 9.6 percent in October from 11.1 percent in September, reflecting the impact of the Government measures to stabilize fuel prices.

Food inflation remained elevated at 10.6 percent in October, mainly due to the impact of depressed rainfall on some food items. Inflation is expected to remain within the target range in the near term with muted demand.

The global economy continues to strengthen, largely supported by the ongoing deployment of vaccines, improved business investment and consumer spending, and accommodative policy measures.

The recently released GDP data indicates that the Kenyan economy rebounded strongly in the first half of 2021, mainly reflecting the recovery in economic activity following the easing of COVID-19 restrictions.

Real GDP grew by 10.1 percent in the second quarter of 2021 compared to a contraction of 4.7 percent in the second quarter of 2020. This reflects the strong recovery of the services sector particularly in transport and storage, education, information and communication, wholesale and retail trade, and the improved performance of the construction and manufacturing sectors.

Leading economic indicators point to a continuing recovery in the second half of 2021 also boosted by the full reopening of the economy.

Economic growth is expected to remain strong in 2022, with the normalization of domestic economic activities, as well as an easing of global supply chain constraints, and stronger global demand.

At the same time, the CBK foreign exchange reserves, which currently stand at USD8,768 million (5.36 months of import cover), continue to provide adequate cover and a buffer against short-term shocks in the foreign exchange market.