Central Bank of Kenya (CBK) Governor, Patrick Njoroge. FILE PHOTO | DIANA NGILA | NMG
The Central Bank of Kenya (CBK) on Monday retained the base lending rate at 8.75 percent on the back of slowing inflation.
The bank’s Monetary Policy Committee (MPC), the top-decision-making organ, held the benchmark rate saying the impact of the tightening monetary policy in November to rein on inflation is taking shape.
The hold is likely to spare consumers any further hikes on bank loans and reduce the government’s cost of local borrowing.
“The (Monetary Policy) Committee noted that the impact of the further tightening of monetary policy in November 2022 to anchor inflationary pressures were still transitioning in the economy,” the CBK said in a statement.
“Additionally, the MPC noted that this action will be complemented by the recently announced government measures to allow limited duty-free imports on specific food items, which are expected to moderate prices and further ease domestic inflationary pressures.”
Inflation — a measure of the cost of living over the last 12 months— slowed to 9.1 percent in December from 9.5 percent a month earlier on lower food prices.
The drop in the last two months signals glimmers of easing in the cost of living crisis, which has hit the highest levels in nearly five and a half years on soaring food and energy prices.
Foodstuffs cost 13.8 percent more in December than a year ago, but this was a drop from a 15.4 percent jump in November, data from the Kenya National Bureau of Statistics showed.
Food accounts for nearly a third of the shopping basket for Kenyan families, meaning it has the biggest impact on the overall movement in prices.
