The Central Bank of Kenya has increased its benchmark interest rate by 50 basis points, the first such adjustment in seven years. The move aims to address rising inflation driven by global commodity price surges and supply chain disruptions, according to the Monetary Policy Committee (MPC).
The decision follows elevated inflation risks linked to persistent drought conditions, a weakened shilling, and ongoing economic challenges from the coronavirus pandemic. The MPC highlighted the impact of the Russia-Ukraine conflict on commodity prices, particularly fuel, wheat, edible oils, and fertilizers.
CBK Governor Dr. Patrick Njoroge emphasized the committee's focus on monitoring policy effects and global economic developments. The MPC stated it would review the rate adjustment if needed, with a scheduled meeting in July 2022. Current inflation stands at 6.5%, within the 2.5%-7.5% target range.
The International Monetary Fund anticipates Kenya's economic growth of 5.7% for 2022, despite these challenges.
