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The Central Bank of Kenya (CBK) on Monday retained the base lending rate at 7 percent for the eleventh time in a row shrugging off jitters over the new Covid-19 variant.
This has spared consumers any increases on the cost of loans this year after the bank regulator send its signal to banks to hold interest rates steady.
The Monetary Policy Committee (MPC) said it held the key rate in its last meeting of 2021 in an environment where inflation expectations were within the target band of 2.5 and 7.5 percent and the economy was on the road to recovery following initial disruption brought about by the Covid-19 pandemic.
“The MPC met on November 29, 2021, against a backdrop of the global Covid-19 pandemic, continued rollout of vaccination programmes, other measures taken by authorities around the world to contain its spread and impact, and the emerging developments regarding a new Covid-19 variant,” MPC chairman and CBK governor Patrick Njoroge said after its meeting.
“The Committee noted that inflation expectations remained anchored within the target range, and leading economic indicators showed continued robust performance. 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.”
Credit to the private sector, the CBK said, grew by 7.8 percent in the year to October compared to 7.0 percent in August, which are both below the ideal growth level of between 12 and 15 percent to support economic development.
The inflation-targeting MPC, however, noted it sees the need to closely monitor developments, adding that it stands ready to respond to any adverse economic effects.
“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. The Committee will meet again in January 2022, but remains ready to re-convene earlier if necessary,” the CBK said.
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