The Central Bank of Kenya (CBK) has retained the benchmark lending rate at 7 per cent the twelfth time in a row, meaning the cost of credit will remain unchanged.
Central Bank of Kenya Governor Dr. Patrick Njoroge who chairs the Monetary Policy Committee says the decision is informed by well anchored inflation expectations which remain anchored within the target range and that leading economic indicators showed continued robust performance.
“The MPC also noted the elevated global risks, and their potential impact on the domestic economy. The Committee concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 per cent,” read MPC statement.
The Committee noted that the 2022 growth will remain strong supported by the continued strong performance of the services sector, recovery in agriculture, and an improvement in global demand.
However, the regulator said they will closely monitor the impact of the policy measures and developments in the global and domestic economy, and stands ready to take additional measures as necessary, including re-convening earlier than March 2022.
The policy maker expects inflation to remain within the target range of 2.5 per cent-7.5 per cent helped by muted demand pressures and the government’s measures to lower electricity tariffs and stabilize fuel prices.
Additionally, they acknowledged strong growth in exports that increased 11.1 per cent in 2021 as compared to a growth of 3.2 per cent in 2020.
MPC notes that the banking sector remains stable and resilient, with strong liquidity, lenders reviewing their business models to leverage on technology, enhanced capital and liquidity buffers.
The committee say private sector credit increased to 8.6 per cent in December 2021, from 7.8 per cent two months earlier, and the number of loan applications was strong in December, reflecting improved demand with increased economic activities.
