CBK retains benchmark lending rate at 10.5%
Central Bank of Kenya's (CBK) Monetary Policy Committee (MPC) has retained the benchmark lending rate at 10.5 per cent.
In a statement, CBK Governor Dr Kamau Thugge noted that inflation is expected to remain within the target range, supported by lower food prices with the expected improved supply.
Kenya’s overall inflation remained broadly unchanged at 6.8 per cent in September 2023, compared to 6.7 per cent in August.
Food inflation increased to 7.9 per cent in September from 7.5 per cent in August, largely on account of increases in the prices of a few key vegetables, particularly onions, Irish potatoes, cabbages, spinach, kales (sukuma wiki), and tomatoes.
Prices of key non-vegetable food items particularly maize and wheat flour declined following improved supply attributed to the ongoing harvests and government measures to zero-rate key food imports.
Fuel inflation remained elevated at 13.1 per cent in September, reflecting the impact of the rise in international oil prices.
Non-food non-fuel (NFNF) inflation remained stable at 3.7 per cent in both September and August.
"Overall inflation is expected to remain within the target range in the near term, supported by lower food prices with the improving supply of key food items, particularly maize, and the implementation of Government measures to improve the supply of sugar through imports," Thugge said.
"Leading indicators of economic activity for Kenya point to strong performance in 2023, supported by the continued robust growth of the services sectors, the rebound in agriculture, and the ongoing implementation of measures to boost economic activity in priority sectors by the Government."
CBK foreign exchange reserves
Currently, CBK foreign exchange reserves stand at USD6,901 million, which is 3.70 months of import cover.
Goods exports increased marginally in the 12 months to August 2023, growing by 0.5 per cent compared to a similar period in 2022.
Receipts from tea and manufactured exports increased by 4.5 per cent and 23.2 per cent, respectively.
"The increase in tea export receipts reflects higher prices due to demand from traditional markets, while the higher manufactured export receipts reflect strong regional demand," Thugge added.
Imports declined by 11.9 per cent in the 12 months to August 2023 compared to a growth of 16 per cent in a similar period in 2022, mainly reflecting lower imports of infrastructure-related equipment, manufactured goods, oil, and chemicals.
Tourist arrivals improved by 34 per cent in the eight months to August 2023 compared to a similar period in 2022 and increased by 55 per cent in August 2023 compared with August 2022.
Remittances totalled USD4.120 billion in the 12 months to August 2023 and were 3.2 per cent higher compared to a similar period in 2022.