CBK Holds Benchmark Interest Rates At 9.5 Percent

The Central Bank of Kenya (CBK) has maintained the benchmark interest rate at 9.5 percent citing the ongoing transmission effects of the previous tightening of monetary policy in March 2023, which aimed to anchor inflationary expectations in the economy.

This move is further supported by recent government measures allowing duty-free imports of specific food items, particularly sugar, to alleviate domestic inflationary pressures and moderate prices. “The committee will meet again in July.”

CBK also says that its survey in the Agricultural Sector during the first half of the month shows that the prices of essential food items had declined. It also expects the supply of vegetables to rise in the coming months due to short rains.

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“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,” said Dr. Patrick Njoroge, the outgoing CBK Governor.

According to the Central Bank of Kenya, the global economic outlook remains uncertain, reflecting continued concern about the financial sector stability in the advanced economies, and continued geopolitical tensions, particularly in the ongoing war between Russia and Ukraine.

At the same time, goods exports have remained strong, growing by 6.6 percent in the 12 months to April 2023 compared to a similar period in 2022. Receipts from tea and manufactured goods export increased by 11.6 percent and 30.4 percent respectively.

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“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 MPC Chairman said.

This was the last Monetary Policy Meeting by Dr. Patrick Njoroge who is set to exit on June 17, 2023, after serving two terms under President Uhuru Kenyatta.