NAIROBI, Kenya, Jul 25 – Central Bank of Kenya has retained the benchmark lending rate at 9 percent, owing to relatively stable inflation rates which remain well anchored within the target range.
The Monetary Policy Committee’s decision is a relief for borrowers, who have been spared higher costs of loans.
Central Bank’s Governor and the Chairman of the Monetary Policy Committee (MPC) Patrick Njoroge said inflation is expected to remain stable in the near term.
“This is largely due to expectations of lower food prices following improved weather conditions, and lower electricity prices with the reduced reliance on expensive power sources,” Njoroge said.
The decision was made against a backdrop of domestic macroeconomic stability, increased optimism on the economic growth prospects, and increased global uncertainties.
Njoroge however called for vigilance on the possible effects of the recent increases in fuel prices, the ongoing demonetisation, and the increased uncertainties in the external environment.
- Economy Continues to grow
The economy remained strong in the first quarter of 2019, despite the effects of the delayed long rains on agricultural production.
Real GDP growth stood at 5.6 percent, reflecting a stronger than expected performance of agriculture and a resilient services sector, particularly information and communication, accommodation and restaurants, and transport and storage.
Leading indicators of economic activity point to stronger growth in the second quarter of 2019.
Consequently, growth in 2019 is expected to remain strong, supported by agricultural production, strong growth of MSMEs and the service sector, foreign direct investment, and a stable macroeconomic environment.
Additionally, the alignment of the FY2019/20 Government Budget to the Big 4 priority sectors is expected to boost economic