The Central Bank of Kenya's Monetary Policy Committee (MPC) kept the Central Bank Rate unchanged at 13.00% on 3 April 2024, as inflation eased and the Kenyan shilling strengthened.
The decision followed the committee's meeting on 6 February 2024, when it raised the rate by 50 basis points from 12.50% to 13.00%. That increase came after a 200 basis point rise to 12.50% in December 2023, extending a tightening cycle that had lifted the rate from 8.75% in January 2023.
INFLATION WITHIN TARGET RANGE
Overall inflation fell to 5.7% in March 2024, its lowest level in two years, within the target range of 2.5% to 7.5% and approaching the 5.0% midpoint. The MPC said previous policy measures had helped lower inflation and address pressures on the exchange rate, with the shilling strengthening against major currencies. The shilling traded at around KES 131 per US dollar, compared with more than KES 160 in late January. Food prices had also declined, including those of maize flour, wheat flour and vegetables such as kales, spinach and cabbages.
The committee concluded that the current monetary policy stance would ensure that overall inflation continued to decline towards the midpoint of the target range. It noted that leading economic indicators pointed to continued strong performance of the Kenyan economy in the first quarter of 2024, with agriculture, services and information and communications technology performing well.
Respondents to the CBK's March 2024 Agriculture Sector Survey expected inflation to decrease over the following three months, on account of lower food prices, favourable weather conditions, the stronger shilling and lower fuel prices.
Bank news that matters, every weekday.
Follow The Global Banker on LinkedIn