NAIROBI, Kenya, Sep 24-Central Bank of Kenya has maintained the base lending rate at 9 percent, owing to stability in inflation rates.
In a statement, the Chairman of the Monetary Policy Committee Patrick Njoroge said month-on-month overall inflation remained within the target in July and August 2019, dropping to 5 percent in August from 6.3 percent in July.
“The MPC concluded that the current policy stance remains appropriate and therefore decided to retain the CBR at 9 percent,” said CBK.
With this decision, the banks will continue to lend at 13 percent, barely a week after parliament refused to do away with the interest cap law that was introduced in Kenya in 2016.
The Monetary Policy Committee said the drop of the country’s inflation was influenced by stability in major areas supporting basic lives.
” The inflation remained within target range as food prices were stable, lower electricity, among others,” reported CBK.
CBK, however, expects the inflation rate to remain within the target range due to expectations of lower food prices with expected favorable weather conditions and lower electricity prices.
At the same time, food inflation from 7.9 percent in July to 6.7 percent in August brought about by improved weather conditions.
The cost of living will, however, go up in the coming months brought by increased fuel prices.
” The recent increase in international oil prices is expected to exert moderate upward pressure on fuel prices but with limited pass-through effects on inflation,” the bank regulator added.
Private sector credit rose to 6.3 percent in the latest review as compared to 6.1 percent in July.
This was attributed to ongoing reforms in the banking sector to tighten Credit Information sharing mechanism and promote transparency in pricing.