This archive report was first published on 29 September 2021.
Published on September 29, 2021, the Central Bank of Kenya (CBK) maintained its benchmark interest rate at 7% during the September Monetary Policy Meeting.
The decision, which was in line with market expectations, marked the ninth consecutive meeting where the bank has kept rates on hold.
The move comes as Kenya grapples with a significant hike in fuel prices, which are expected to remain high until October 14, 2021. The Energy and Petroleum Regulatory Authority (EPRA) has reported that fuel prices in Kenya have reached an all-time high following the discontinuation of a subsidy scheme aimed at easing public outrage over the high cost of living.
Additionally, the Kenya Shilling has been experiencing a decline, making it more expensive for dealers to import crude oil.
Central Bank on Inflation ¶
Kenya's August 2021 inflation rate climbed to 6.57%, up from 6.55% in July, primarily due to the high cost of food and transport. The situation remains unchanged, with late rains delaying in most farming counties, affecting food supply.
According to the Central Bank, the Monetary Policy Committee (MPC) noted that inflationary pressures were rising domestically and internationally, but expectations about inflation remained anchored within the target range in the medium term. The MPC concluded that the current accommodative monetary policy stance remains appropriate, and therefore decided to retain the Central Bank Rate (CBR) at 7.00 percent.
