Kenya central bank holds rates at 13% with inflation outlook stable

AFRICAN BUSINESS AND ECONOMYJune 6, 2024 at 6:47 PM UTC

TLDR

Kenya's central bank maintains benchmark lending rate at 13% for stability in inflation and exchange rate.
Second consecutive time for Central Bank of Kenya (CBK) to keep rate unchanged.
Monetary Policy Committee (MPC) aims to stabilize overall inflation and exchange rate with current policy stance.

Kenya's central bank maintained its benchmark lending rate at 13% on Wednesday, citing stable inflation within its near-term target range and a commitment to exchange rate stability.

This decision marks the second consecutive time the Central Bank of Kenya (CBK) has kept the rate unchanged, following a similar decision in April. The CBK had previously raised rates in December and February to stabilize the exchange rate and address persistent inflationary pressures.

In a statement, the Monetary Policy Committee (MPC) emphasized that the current monetary policy stance aims to keep overall inflation stable around the mid-point of the target range while ensuring continued stability in the exchange rate.

Key Takeaways

The Kenyan shilling has stabilized against the dollar following the government's issuance of a $1.5 billion bond in February, part of which was used to partially redeem another maturing bond in June. Despite inflation hovering at the higher end of the government's 2.5-7.5% target range for several months, it edged up slightly to 5.1% in May from 5% in April. Official data indicates that Kenya's economy expanded by 5.6% in 2023, up from 4.9% the previous year. The central bank remains optimistic about economic growth in 2024, despite challenges such as widespread flooding earlier in the year.

Kenya

Kenyan Shilling

Interest Rates

Inflation

CBK

Central Bank of Kenya

Monetary Policy Committee

Economy