Kenya: Central Bank of Kenya Retains Base Lending Rate at 7%

Nairobi — The Central Bank of Kenya has retained the base lending rate at seven percent for the 13th time in a row noting that all leading economic indicators show improved performance in the country.

The committee noted that the indicators point to a strong performance of the Kenyan economy in the first quarter of 2022, supported by robust activity in construction, information and communication, wholesale and retail trade, transport and storage, and manufacturing sectors.

“The economy is expected to remain resilient supported by recovery in agriculture and continued strong performance of the services sector despite the downside risks to global growth in 2022,” read a statement from CBK Governor, Patrick Njoroge.

Even so, the CBK Monetary Policy Committee (MPC) noted that the global economic outlook remains uncertain, reflecting the ongoing Russia-Ukraine conflict that started at the end of February and a spike in Covid-19 cases, especially in China.

According to CBK, the prices of commodities particularly oil, wheat, and fertilizer have risen sharply as a result of supply disruptions, adding to the already elevated global inflationary pressures.

“Financial market volatility has also increased amid adjustments in monetary policy in advanced economies,” said CBK.

The three surveys conducted ahead of the MPC meeting — Private Sector Market Perceptions Survey, CEOs Survey, and the Survey of Hotels — revealed continued optimism about business activity, employment, and economic growth prospects for 2022.

The optimism was attributed to reduced Covid-19 infection rates, anticipated favourable weather conditions, and increased infrastructure spending.