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Kenya’s Central Bank has retained the benchmark lending rates to commercial banks at seven percent for the 10th consecutive time to support the recovery of an economy battered by the Covid-19 pandemic and surging inflationary pressures triggered by high food and fuel prices.
The banking regulator’s unchanged Central Bank Rate (CBR) is designed to allow increased spending by households and businesses to boost economic activities in the country.
The bank’s monetary policy committee (MPC) which met on Wednesday noted that the economy has persistently operated below its potential level, with the private sector businesses being more concerned about continuing uncertainties over the pandemic, increased taxes, and heightened political activity.
“The MPC 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,” Governor Patrick Njoroge, who also doubles as the chairman of the Monetary Policy Committee said in a statement on Wednesday.
The country’s overall inflation for the month of June increased to 6.3 percent from 5.9 percent in May, largely due to increases in food and fuel prices.
According to CBK food inflation increased to 8.5 percent from seven percent, mainly on account of higher prices of some food items such as cooking oil, beef with bones, white bread, and wheat flour while fuel inflation remained elevated at 13.5 percent and 14.3 percent in June and May respectively
The bank, however, noted that exports of goods remained strong, growing by 11.1 percent in the first half of 2021 compared to a similar period in 2020.
Receipts from exports of horticulture and manufactured goods rose by 29.4 percent and 45.2 percent, respectively while receipts from tea exports declined by 5.5 percent during the same period.
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