The Central Bank of Kenya (CBK), through its top policy-making organ-the Monetary Policy Committee (MPC) on Monday, retained the benchmark lending rate at 8.75%, citing that the current monetary policy has successfully curbed inflation.
Monetary Policy Committee (MPC) increased the rate to 8.75% in November from 8.25% to address rising inflation, reaching 9.5% from 9.1% in October.
The MPC made the decision, saying that inflationary pressures are expected to ease due to the government allowing duty-free imports of maize, sugar, and rice.
It also stated that the impact of the November 2022 rate hike hasn’t fully taken effect yet, reducing the need for another increase.
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.
CBK Governor – Patrick Njoroge
The Monetary Policy Committee (MPC) reported that private sector credit growth rose to 12.5% in 2022 from 8.6% in 2021.
This growth was particularly evident in the manufacturing sector (13.8%), transportation and communication (23.5%), trade (11.4%), business services (13.7%), and consumer durables (12.9%).
The MPC estimated a 5.6% increase in GDP for 2022. Despite global uncertainties, the economy is anticipated to remain robust in 2023, driven by the continued strength of the services sector and a projected recovery in agriculture.
Monetary Policy Committee concluded that the current monetary policy is suitable, hence the decision to keep the Central Bank Rate unchanged at 8.75%. This is beneficial for borrowers as it was previously anticipated that the rate would increase, avoiding additional loan costs.
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