The Central Bank of Kenya (CBK) kept its benchmark interest rate unchanged at 7% during the September Monetary Policy Meeting held on Tuesday.
The bank has now kept rates on hold in its last nine meetings, and the decision was in line with market expectations.
The MPC met at a time when there has been a huge hike in the price of fuel, that will run between September 15th to October 14th, 2021.
According to data from the Energy and Petroleum Regulatory Authority (EPRA), fuel prices in Kenya have risen to the highest level in the country’s history after the authorities discontinued a subsidy scheme aimed at easing public outrage over the high cost of living.
At the same time, the Kenya Shilling has been on a losing streak, making it expensive for dealers to import crude.
Central Bank on Inflation
Additionally, Kenya’s August 2021 inflation climbed to 6.57% compared to 6.55% Inflation rate in July due to the high cost of food and transport. This scenario has not changed as late rains delay in most parts of the farming counties, affecting food supply.
“The Committee noted that inflationary pressures were rising domestically and internationally, even as expectations about inflation remained anchored within the target range in the medium term. The MPC therefore saw the need to closely monitor developments in inflation and stands ready to respond to any second-round effects. 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 percent.” The Central Bank noted in a statement.
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