NAIROBI, Kenya, Sep 28- The Central Bank of Kenya (CBK) has retained its benchmark lending rate at 7 per cent for the eleventh time in a row citing the appropriateness of the “current accommodative monetary policy stance”.
CBK’s Monetary Policy Committee (MPC) which held its meeting on Wednesday, nonetheless, noted that inflation pressures are expected to be elevated in the near term, mainly driven by increases in fuel and food prices.
“Inflation pressures are expected to be elevated in the near term, mainly driven by an increase in fuel and food prices and the impact of the recently implemented measures,” MPC which is mandated to regulate the supply of money and interest rates said.
In August, the overall inflation stood at 6.6 per cent compared to the 6.5 per cent rate in July.
The regulator, nonetheless said that inflation is expected to remain within the target 7 per cent range with muted demand pressures.
CBK added that the economy is expected to rebound in 2021, supported by the continued reopening of the services sectors, recovery in manufacturing, and stronger global demand.
The robust performance of construction, manufacturing, education, real estate, and transport, and storage sectors were mentioned as main supporters for the economy.
The MPC’s survey also noted that the banking sector remained stable and resilient, with strong liquidity and capital adequacy ratios.
“The ratio of gross non-performing loans (NPLs) to gross loans stood at 13.9 per cent in August compared to 14.0 per cent in June,” the statement added.
Repayments and recoveries were noted in the tourism, restaurants and hotels and building and construction sectors.
Consequently, private sector credit growth increased to 7.0 per cent in August 2021, from 6.1 per cent.
