Kenya: Central Bank raises its rate for the first time in 7 years


Meeting this Monday, May 30, the Monetary Policy Committee of the Central Bank of Kenya decided to raise the rate of the issuing institution (CBR) from 7.00 to 7.50%. Reason, high risks to the inflation outlook due to rising global commodity prices and supply chain disruptions.

These risks, according to the body, led the Central Bank of Kenya to conclude “that it was possible to tighten monetary policy in order to further anchor inflation expectations”. The hike, the first since July 2015, may help support local currency expectations and anchor inflation expectations, though it may slow economic growth, the committee said.

Headline inflation rose from 5.6% in March to 6.5% in April 2022, mainly due to higher food and fuel prices, the institution said.

In detail, food inflation rose from 9.9% in March to 12.1% in April, mainly due to vegetable prices due to seasonal factors and the impact of supply chain disruptions worldwide on cooking oil prices. Fuel inflation rose from 5.8% to 8.5%, due to the rise in international oil prices. However, explains the Central Bank, this increase was moderated by government measures aimed at stabilizing fuel prices and reducing electricity tariffs.