On May 30, 2022, the Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK) met to review the country's economic situation amidst a changed global outlook.
Dr. Patrick Njoroge, the Governor of the CBK, led the committee in assessing the impact of global inflationary pressures, heightened geopolitical tensions, rising commodity prices, and the COVID-19 pandemic on the Kenyan economy.
According to the CBK, overall inflation increased to 6.5 percent in April 2022 from 5.6 percent in March, mainly due to higher food and fuel prices.
Food inflation rose to 12.1 percent in April from 9.9 percent in March, largely on account of vegetable prices due to seasonal factors and the impact of global supply chain disruptions on cooking oil prices.
Fuel inflation increased to 8.5 percent from 5.8 percent driven by the rise in international oil prices, but this increase was moderated by government measures to stabilize fuel prices and lower electricity tariffs.
The global economic outlook has become more uncertain, reflecting the impact of the ongoing Russia-Ukraine conflict, uncertainty about the required policy responses in advanced economies, effects of COVID-19 containment measures in China, and persistent supply chain disruptions.
The pace of global economic growth has decelerated mainly reflecting the slowdown in the U.S. and China, while global inflationary pressures remain elevated reflecting the impact of the sharp increase in prices of commodities particularly fuel, fertiliser, edible oils, and wheat.
Financial market volatility has also increased significantly amid the recent adjustments in monetary policy in advanced economies.
The CBK noted the adverse impact of the ongoing Russia-Ukraine conflict and other global disruptions on the Kenyan economy through increases in commodity prices particularly fuel, wheat, edible oils, and fertiliser.
Despite these challenges, the Kenyan economy rebounded strongly in 2021, with real GDP growing by 7.5 percent from a contraction of 0.3 percent in 2020, according to the Economic Survey 2022.
Leading economic indicators show continued strong performance in the first quarter of 2022, supported by robust activity in construction, information and communication, wholesale and retail trade, transport and storage, and manufacturing sectors.
