CBK shrugs off poll jitters and Russia-Ukraine war to retain rate

The Central Bank of Kenya (CBK) on Tuesday retained the base lending rate at 7 percent for the thirteenth time in a row shrugging off mounting jitters over the economic fallout from the Russia-Ukraine onslaught and the upcoming August 9 General Election.

This has spared consumers any increases in the cost of loans this year after the bank regulator sent its signal to banks to hold interest rates steady.

The Monetary Policy Committee (MPC) said it held the key rate in its second meeting of 2022 in an environment where inflation expectations were within the target band of 2.5 and 7.5 percent and the economy was on the road to recovery following the initial disruption brought about by the Covid-19 pandemic.

“The Monetary Policy Committee (MPC) met on March 29, 2022, against a backdrop of a changed global outlook with heightened geopolitical tensions, volatile commodity prices, the Covid-19 (coronavirus) pandemic and measures taken by authorities around the world in response to these developments,” MPC chairman and CBK governor Patrick Njoroge said after its meeting.

“The Committee noted that inflation expectations remain anchored within the target range supported by the Government’s policy interventions, and leading economic indicators show improved performance.”

Prof Njoroge said the MPC also noted the elevated global risks and their potential impact on the domestic economy and concluded that the current accommodative monetary policy stance remains appropriate.

Credit to the private sector, the CBK said, grew by 9.1 percent in the year to February compared to 8.6 percent in December, which is both below the ideal growth level of between 12 and 15 percent to support economic development.