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