The Central Bank of Kenya left its benchmark interest rate unchanged at 13%, citing easing inflation pressures and an improved economic outlook.
The Monetary Policy Committee (MPC) of the Central Bank of Kenya said overall inflation declined to 5.7% in March from 6.3% in February, driven by lower food and fuel prices.
“The MPC noted that its previous measures have lowered inflation, addressed the exchange rate pressures, and anchored inflationary expectations,” said Dr. Kamau Thugge, Chairman of the MPC, in a press release.
The Committee expects inflation to continue moderating in the near term, supported by easing food and energy costs as well as the recent strengthening of the Kenyan shilling currency.
“Overall inflation is expected to continue declining…towards the 5.0 percent mid-point of the target range,” Dr. Thugge added.
The decision to hold the Central Bank Rate (CBR) at 13% came against the backdrop of an improved global economic outlook, despite persistent geopolitical tensions like the Russia-Ukraine conflict.
Domestically, the MPC noted continued strong economic performance in the first quarter of 2024, driven by robust agricultural activity and services sector growth.
“The economy is expected to remain strong in 2024, supported by the resilient services sector, robust agriculture sector performance, and improved global growth outlook,” the press release stated.
Business sentiment has also improved, according to surveys of CEOs and market participants conducted ahead of the MPC meeting. Respondents cited enhanced agricultural output, easing inflation, a stronger shilling, and resilient private sector activity as drivers of increased optimism.
“Nonetheless, respondents remained concerned about taxation, high interest rates, and geopolitical risks,” the CBK acknowledged.
The central bank said it would closely monitor economic developments and “stands ready to take further action as necessary” to achieve its inflation target.
