The Central Bank of Kenya (CBK) raised its benchmark lending rate to 7.5% in May 2022, stating that persistent inflation risks linked to global commodity price surges and supply chain disruptions necessitated tighter monetary policy, according to Governor Patrick Njoroge's statement.
The decision marked the first adjustment since April 2020, when the rate was held at 7% to cushion the economy from pandemic-related shocks. The Monetary Policy Committee (MPC) emphasized the need to stabilize inflation expectations amid volatile global conditions.
Kenya's overall inflation reached 6.5% in April 2022, up from 5.6% in March, with food inflation rising to 12.1% and fuel inflation climbing to 8.5%. The Kenya National Bureau of Statistics attributed these trends to both domestic and international factors, including seasonal food supply issues and higher global oil prices.
Njoroge highlighted the impact of the Russia-Ukraine conflict, China's pandemic measures, and ongoing supply chain bottlenecks on Kenyan prices, particularly for fuel, wheat, and fertilizers. While business surveys indicated optimism about 2022 economic growth driven by post-pandemic recovery and infrastructure investments, concerns remained about inflationary pressures.
Export growth for goods rose 11.1% in the 12 months to April 2022 compared to the same period in 2021. The banking sector maintained stability, with non-performing loans at 14.1% in April 2022 and private credit growth at 11.5%. The MPC pledged to monitor developments and adjust policy as needed, with a scheduled meeting in July 2022.
