Kenyans will still continue servicing their loans at higher interest rates after Central Bank OF Kenya’s Monetary Policy Committee meeting upheld the base lending rate at 13 percent.
Despite citing positive progress in cost of living and exchange rate in the Kenyan market.
The MPC noted that its previous measures have lowered overall inflation to the mid-point of the target range, stabilised the exchange rate, and anchored inflationary expectations.
The Committee further noted that the Non-food non-fuel (NFNF) inflation has remained sticky in the recent months, and that interest rates in the major economies are expected to remain higher-for-longer due to the stickiness of inflation.
The MPC maintained that the current monetary policy stance will ensure that overall inflation remains stable around the mid-point of the target range in the near term, while ensuring continued stability in the exchange rate.
“Therefore, the Committee decided to retain the Central Bank Rate (CBR) at 13.00 percent,” said the committee.
In the period food inflation stood at 6.2 percent in May compared to 5.6 percent in April, reflecting increases in prices of select vegetables particularly onions, tomatoes, Irish potatoes, and kales (sukuma wiki), due to supply disruptions attributed to the recent heavy rains and flooding in some parts of the country.
Prices of key non-vegetable food items, particularly maize, sugar, and wheat flour declined following improved supply.
Fuel inflation declined to 7.8 percent in May from 8.3 percent in April, partly reflecting a downward adjustment in pump prices and lower electricity prices.
Non-food non-fuel (NFNF) inflation eased to 3.4 percent in May from 3.6 percent in April, reflecting the impact of monetary policy measures.
“Overall inflation is expected to remain stable around the mid-point of the target range in the near term, supported by the stable exchange rate, improved food supply attributed to favorable weather conditions, stable fuel prices, and the impact of monetary policy actions which continue to filter through the economy,” said CBK
