Kenya retains key interest rate at 10pc

Central Bank of Kenya governor Patrick Njoroge. FILE PHOTO | EVANS HABIL |  NATION MEDIA GROUP

By James Anyanzwa

The Central Bank of Kenya’s (CBK) decided to retain its key policy rate at 10 per cent for the fourth time in a row despite concerns over surging inflation and a slowdown in private sector credit growth.

On Monday, the CBK’s Monetary Policy Committee kept the central bank rate (CBR) unchanged since the government enactment of the law capping lending rates at four  percentage points above the  benchmark rate.

The committee said inflation is expected to remain beyond the government’s upper limit of 7.5 per cent due to high cost of food triggered by the drought conditions in the country.

Kenya’s overall inflation for April rose to 11.48 per cent from 10.28 per cent in March this year.

The committee also observed that the country’s economic growth remains weaker on account of the impact of drought and the slowdown in private sector credit growth in key sectors such as trade, manufacturing, real estate and private households.

"Nevertheless, the prevailing policy stance had reduced the threat of demand driven inflation. The MPC therefore decided to retain the Central Bank Rate (CBR) at
10.0 per cent," said Patrick Njoroge, the CBK governor and chairman of the policy committee.