Kenya Holds Interest Rate at 9.50%

Kenya’s central bank on Monday maintained its key interest rate at 9.50% in order to tame inflation, the country’s central bank governor, Patrick Njoroge, said Wednesday at a virtual press briefing.

The benchmark rate has been steady since November 2022, when it increased from 8.75% due to an inflation-fighting mood across the world.

“The Monetary Policy Committee noted that the impact of the further tightening of monetary policy in March 2023 to anchor inflationary expectations was still transmitting in the economy,” the bank said in a statement.

In addition, the committee noted that this action is complemented by the recent measures to allow duty-free imports of specific food items–particularly sugar–which are expected to moderate prices and ease domestic inflationary pressures, it said

Kenya’s inflation rate declined to 7.9% in April from 9.2% in March, mainly due to lower food prices. However, recent increases in electricity prices, the removal of the fuel subsidy, and a sharp rise in sugar prices are expected to exert moderate upward pressure on overall inflation, Njoroge said.

The committee will meet again in July, but could reconvene earlier, if necessary, it said. Kenya’s inflation rose to 8% year-on-year in May, from 7.9% last month, data from the statistics office showed on Wednesday.

On a monthly basis, May inflation was at 0.9% compared to 0.5% in April, the Kenya National Bureau of Statistics said in a statement. The government has a preferred inflation range of 2.5%-7.5% in the medium term.