On Monday, the Central Bank of Kenya (CBK) decided to maintain its benchmark lending rate at 9.5 percent, citing a backdrop of inflationary pressures showing signs of alleviation.
The CBK raised the base-lending rate to 9.5 per cent at the end of March from 8.75, to tame the runaway inflation.
CBK Governor Patrick Njoroge, who chaired the Monetary Policy Committee (MPC) meeting in Nairobi, said that overall inflation has been falling, mainly driven by lower food prices.
In April 2023, Inflation experienced a decrease to 7.9 percent compared to the previous month’s 9.2 percent. This decline can primarily be attributed to reduced food prices.
Food inflation witnessed a decline, dropping to 10.1 percent from the previous month’s 13.4 percent. This downward trend can be attributed to several factors, including the decreased prices of vegetables, which can be attributed to the ongoing rains.
Additionally, there has been an improvement in the supply of specific non-vegetable food items, further contributing to the moderation in food inflation.
Fuel inflation remained up at 13.2 percent in April, primarily driven by the surge in electricity prices resulting from higher tariffs and the reduction of the fuel subsidy.
The MPC noted that the impact of the further tightening of monetary policy in March to anchor inflationary expectations was still impacting the economy.
In a statement, Njoroge expressed the expectation of a gradual decline in food inflation in the upcoming months, attributing it to the beneficial effects of the long rains and reduced global food prices.
Njoroge said the tightening of monetary policy will be complemented by the recently announced government measures to allow duty-free imports of specific food items, particularly sugar, which are expected to moderate prices and ease domestic inflationary pressures
“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,” Njoroge said.
Also, he stated that the Monetary Policy Committee is scheduled to convene once more in July 2023. However, he emphasized that the committee is prepared to reconvene earlier if the need arises.
Do you have any story or press releases you want to share? Send tips to firstname.lastname@example.org