Kenya’s Central Bank raises policy rate by 75bps to 9.5%
The Central Bank of Kenya has hiked its monetary policy rate by 75 basis points (0.75%) to 9.5%.
This is from a previous policy rate of 8.75%.
Announcing the new policy rate, Governor of the Central Bank of Kenya, Dr Patrick Njoroge averred sustained inflationary pressures and elevated global risks with potential impact on the Kenyan economy, necessitated the policy rate hike to anchor inflation expectations.
“The MPC noted the sustained inflationary pressures, the elevated global risks and their
potential impact on the domestic economy, and concluded that there was scope for a further tightening of the monetary policy in order to anchor inflation expectations. In view of these developments, the MPC decided to raise the Central Bank Rate (CBR) from 8.75 percent to 9.50 percent.
“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,” he quipped.
The country’s inflation increased to 9.2 percent in February 2023 from 9.0 percent in January,
mainly driven by higher food prices.
Food inflation rose to 13.3 percent in February
from 12.8 percent in January, mainly due to increases in the prices of vegetables, attributed to hot and dry weather conditions witnessed in the period.
Additionally, fuel inflation remained elevated at 13.8 percent in February, largely reflecting the scaling down of the fuel subsidy and increases in electricity prices due to higher tariffs.
Overall inflation is however, expected to remain elevated in the near term, partly reflecting further increases in electricity prices.
