CBK Retains Lending Rate At 8.75 Percent

The Central Bank of Kenya through the Monetary Policy Committee has retained the Central Bank Rate at 8.75 percent on the account that “the current monetary policy stance remains appropriate.”

The Committee met against a backdrop of a weak global growth outlook, the decline in global commodity prices, easing inflationary pressures, geopolitical tensions, persistent uncertainties, and measures taken by authorities around the world in response to these developments.

“The Committee will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and stands ready to take additional measures, as necessary. The Committee will meet again in March 2023 but remains ready to re-convene earlier if necessary,” said CBK in a statement.

According to the regulator, overall inflation decreased to 9.1 percent in December 2022 from 9.5 percent in November, mainly due to lower food prices.

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Here is the full statement from MPC:

Food inflation declined to 13.8 percent in December from 15.4 percent in November, largely driven by a decrease in prices of maize and milk products following improved supply attributed to the ongoing harvests and the impact of the recent short rains, respectively.

Additionally, prices of edible oils and wheat products declined due to lower global commodity prices with the easing of international supply chain disruptions. This will be interesting to watch for the coming month.

Fuel inflation declined to 12.7 percent in December 2022 from 13.8 percent in November, due to lower international oil prices, but remains elevated on account of the scaling down of the fuel subsidy and increases in electricity prices due to higher tariffs.

Overall inflation is expected to decline in the near term, also supported by the recently announced Government measures to allow duty-free imports of key food items particularly maize, rice, and sugar.

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