Central Bank of Kenya Retains Key Rate at 10%

The MPC of Kenya’s Central Bank met on July 17, 2017, to review the outcome of its policy decisions and recent economic developments. The Committee decided to retain the Central Bank Rate (CBR) at 10.0 percent ‘in order to continue to anchor inflation expectations.’

The Bank issued the following statement;

  • Month-on-month overall inflation fell to 9.2 percent in June from 11.7 percent in May 2017, largely due to decreases in food prices.
  • The 12-month current account deficit widened to 6.2 percent of GDP in May 2017 from 6 percent in March, due to short-term imports of cereals, sugar, and SGR-related transport equipment.
  • The CBK’s foreign exchange reserves currently stand at USD7,802.7 million (5.2 months of import cover), falling from recent record levels of USD8,276.5 million at end-May 2017, almost entirely as a result of anticipated payments for Government obligations of USD560.7 million.
  • The banking sector remains resilient with improved performance indicators. Average commercial banks’ liquidity and capital adequacy ratios stood at 44.7 percent and 19.6 percent, respectively, in June 2017.
  • Growth of credit to the private sector fell further to 2.1 percent over the 12 months to May 2017, partly due to significant repayments in manufacturing, transport and communication, and developments in the trade sector.
  • The outlook for the global economy remains uncertain, particularly with regard to the direction of U.S. economic and trade policies, normalization of monetary policies in the advanced economies and the Brexit outcome.