The Central Bank of Kenya’s Monetary Policy Committee (MPC) held its scheduled meeting this week to assess the state of the economy and decide on the direction of monetary policy.
After a comprehensive review of recent macroeconomic developments, the committee opted to maintain the Central Bank Rate (CBR) at its current level, signaling a cautious but optimistic stance as inflationary pressures show signs of easing and the Kenyan shilling stabilises.
According to the post-meeting press release, the MPC noted that overall inflation had declined for the third consecutive month, driven mainly by lower food and fuel prices.
The latest figures show headline inflation falling within the government’s preferred target range of 2.5 to 7.5 percent, providing some relief to consumers after a prolonged period of elevated living costs.
The committee also observed that the exchange rate has shown greater stability in recent weeks, helped by improving foreign exchange inflows, a narrowing current account deficit, and the impact of earlier monetary tightening measures. This has contributed to more predictable pricing for imports and moderated pressure on foreign reserves.
Private sector credit growth remained moderate, with increased lending to manufacturing, transport, and trade sectors, reflecting gradual economic recovery.
However, the MPC highlighted lingering risks to growth, including global uncertainties, regional instability, and weather-related shocks that could affect agricultural output and food supply.
While acknowledging these risks, the MPC expressed confidence in the effectiveness of current policies, suggesting that previous rate hikes have begun to take effect in reining in inflation and supporting macroeconomic stability.
It reaffirmed its commitment to take further action if necessary to anchor inflation expectations and maintain price stability.
The next meeting of the MPC is scheduled to take place in two months, but the committee emphasised that it will continue to monitor developments closely and convene earlier if economic conditions warrant.
The Central Bank reiterated its focus on sustaining a conducive environment for growth while safeguarding the purchasing power of Kenyan households.
Written By Ian Maleve
