The Central Bank of Kenya top organ, the Monetary Policy Committee (MPC), on Monday May 30th 2022, raised the benchmark rate for the first time since July 2015. The MPC raised the CBR from 7.00% to 7.50% saying inflation outlook is elevated due to rising commodity prices and disruptions in the supply chain, informing its decision to hike the CBR to ease inflationary pressure.
Given these developments, the MPC decided to raise the Central Bank Rate (CBR) from 7.00 per cent to 7.50 per cent.
The Committee said it closely monitors the impact of the policy measures and happenings on the global and local scene and will take additional steps when the situation demands.
The MPC is scheduled to meet again in July 2022 but remains ready to reconvene earlier if necessary.
CBK cites Russian-Ukraine conflict for increased commodity prices
The CBK said the Russian-Ukraine conflict and other disruptions in the Kenyan economy have increased fuel prices, wheat, edible oils, and fertilizer.
Surveys conducted by the CBK indicate improved prospects in 2022, a situation attributed to ease of COVID-19 restrictions and increased spending by the state on infrastructure.
MPC notes the impact of rising inflationary pressure, the Russian-Ukraine crisis, and heightened political activity as Kenya goes to the polls.
CBK said Kenya’s banking sector remains stable and resilient, with the ratio of gross non-performing loans to the entire industry loan book standing at 14.1 per cent in April 2022, compared to 14.0 per cent two months ago.
The portfolio of non-performing loans was huge in the communication sector, transport, manufacturing, building and construction and trade sectors.
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