CBK Retains Base Lending Rate at 7.5% Per Cent as global Inflation

The Central Bank of Kenya has retained the base lending rate at 7.5 per cent even as global inflation remains elevated. In a statement after its Monetary Policy Committee meeting on Wednesday, CBK Governor Patrick Njoroge noted that the global economic outlook has become more uncertain, despite the recent moderation in commodity prices.“ The Committee noted…

The Central Bank of Kenya(CBK) has retained the base lending rate at 7.5 per cent even as global inflation remains elevated.

CBK raised the rate from 7 per cent in May as an accommodative stance to the emerging inflationary pressures in the global economy.

In a statement after its Monetary Policy Committee(MPC) meeting on Wednesday, CBK Governor Patrick Njoroge noted that the global economic outlook has become more uncertain, despite the recent moderation in commodity prices. “The Committee noted that its action of tightening monetary policy in may was timely in anticipating emerging inflationary pressures, and its impact was still transmitting through the economy” Patrick Njoroge.

The apex bank, however, opted to soften its outlook on inflation, noting that high global prices of oil, wheat, and edible oils are now easing and that the 0.5 percentage point rate increase announced in the May meeting is still transmitting through the economy and has been complemented by the government’s package of fiscal measures to moderate the prices of specific items.

“The recent waiver of import duties and levies on white maize, the subsidy on retail prices of sifted maize flour, and the recent reduction in VAT on LPG will further moderate domestic prices…Additionally, the Committee noted that international commodity prices, particularly oil, wheat, and edible oils had begun to moderate. These developments are expected to ease domestic inflationary pressures in the near term.” said the CBK on Wednesday.

Local food produce prices have also eased since June, the CBK said, particularly cabbages, tomatoes, onions, potatoes, and green maize whose supply has improved.

Nevertheless, respondents remained concerned about high inflation, the impact of the war in Ukraine on commodity prices, supply chain disruptions, and the impact of the depressed rainfall on agricultural production.

Goods exports have remained strong, growing by 11.2 per cent in the 12 months to June 2022 compared to a similar period in 2021.

Imports of goods increased by 21.7 per cent in the 12 months to June 2022 compared to an increase of 3.6 per cent in the 12 months to June 2021, mainly reflecting increased imports of oil and intermediate goods.

The banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios.

The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.7 per cent in June 2022, compared to 14.1 per cent in April.

Growth in private sector credit increased to 12.3 per cent in June 2022, from 11.5 per cent in April. “The Committee will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and stands ready to take additional measures, as necessary,” Patrick Njoroge.

He added that the Committee will meet again in September 2022 but remains ready to re-convene earlier if necessary.

SOURCE: The Kenya wall street

ANA NEWS WIRE Disclaimer:
The African News Agency (ANA) is a news wire service and therefore subscribes to the highest standards of journalism as it relates to accuracy, fairness and impartiality.
ANA strives to provide accurate, well sourced and reliable information across Text, Images and Video. Where errors do appear, ANA will seek to correct these timeously and transparently.
The ANA platform also contains news and information from third party sources. ANA has sought to procure reliable content from trusted news sources but cannot be held responsible for the accuracy and opinions provided by such sources on the ANA platform or linked sites.
The content provided for on the ANA News Wire platform, both through the ANA news operation and via its third party sources, are for the sole use of authorised subscribers and partners. Unauthorised access to and usage of ANA content will be subject to legal steps. ANA reserves its rights in this regard.
ANA makes every effort to ensure that the website is up and running smoothly at all times, however ANA does not take responsibility for, and will not be held liable for times when the website is temporarily unavailable due to technical issues that are beyond our control.