Kenya Hikes Interest Rate to 9.50%
Patrick Ngugi Njoroge, Gov, Central Bank of Kenya
Kenya’s central bank monetary policy committee on Wednesday raised its key interest rate by 75 basis points to 9.50% from 8.75% in order to tame inflation pressures.
The nation’s monetary authority increased its key lending rate by 50 basis points to 8.75% in November as the fight against Kenya’s rising consumer price index gets dirty.
“The Monetary Policy Committee 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,” the bank said.
Kenya’s inflation rate increased to 9.2% in February from 9.0% in January mainly due to higher food prices. Food inflation rose to 13.3% in February from 12.8% in January, mainly due to increases in the price of vegetables, attributed to hot and dry weather conditions witnessed in the period, it said.
In addition, fuel inflation remained elevated at 13.8% in February, largely reflecting the scaling down of the fuel subsidy and increases in electricity prices due to higher tariffs, it said.
“Overall inflation is expected to remain elevated in the near term, partly reflecting further increases in electricity,” the bank said. “Nonetheless, the long rains will moderate food inflation in the coming months.”
The committee will meet again in May, but remains ready to reconvene earlier if necessary, the bank said.
