Kenya Central Bank Retains Key Interest Rate at 8.75% to Tame Inflation

By George Mwangi

Special to Dow Jones Newswires

NAIROBI--Kenya's central bank on Monday retained its key interest rate at 8.75% in order to tame inflation pressures.

The central bank increased its key lending rate by 50 basis points in November.

"The Committee noted that the impact of the further tightening of monetary policy in November 2022 to anchor inflationary pressures was still transmitting in the economy," the bank said in its monetary policy committee statement.

Inflation is expected to decline in the near term, also supported by the recently-announced government measures to allow duty-free imports of key food items, particularly corn, rice and sugar, it said.

Kenya's inflation rate decreased to 9.1% in December from 9.5% in November mainly due to lower food prices.

Food inflation declined to 13.8% in December from 15.4% in November, largely driven by a decrease in prices of corn and milk products, it said.

Prices of edible oils and wheat products also declined due to lower global commodity prices with the easing of international supply chain disruptions, it said.

Fuel inflation declined to 12.7% in December from 13.8% in November, due to lower international oil prices, but remains elevated on account of the scaling down of the fuel subsidy and increases in electricity prices due to higher tariffs, it said.

The committee will meet again in March, but remains ready to reconvene earlier if necessary, the bank said.

Write to Barcelona Editors at [e-mail]

(END) Dow Jones Newswires

01-30-23 1012ET