Kenya’s central bank kept its policy rate at 8.75 per cent for a fourth consecutive meeting. September annual inflation rose to 6.8 per cent, while the bank expects prices to remain within its target range. Private-sector lending grew faster and the share of non-performing loans fell. The central bank also raised its growth forecast for this year to 5.0 per cent.
The Central Bank of Kenya’s Monetary Policy Committee kept the policy rate at 8.75 per cent on October 7. This was the fourth consecutive meeting without a change. The bank judged that stance appropriate for containing inflation expectations and supporting exchange-rate stability, while expecting inflation to stay within its target range.[1], [2]
September annual consumer inflation increased to 6.8 per cent from 6.6 per cent in August. Core inflation rose from 3.4 per cent to 4.0 per cent, with higher prices for milk, wheat products and edible oils. Non-core inflation eased from 14.7 per cent to 14.0 per cent as price increases in vegetables and energy slowed.[1], [2]
The bank said fuel subsidies and a temporary value-added-tax reduction continued to soften price pressures. It will monitor global oil prices and their further effects on domestic inflation.[1]
Annual growth in private-sector bank lending increased from 10.3 per cent in August to 10.6 per cent in September. Non-performing loans fell from 14.8 per cent of gross loans in June to 13.9 per cent in September. Stronger industry and services led the bank to raise this year’s growth forecast from 4.9 per cent to 5.0 per cent.[1], [2]
