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CBK keeps benchmark lending rate unchanged at 7pc



The Central Bank of Kenya (CBK) has retained the benchmark lending rate at 7% as has been the case since April 2020, meaning the cost of credit will remain unchanged.

Central Bank of Kenya Governor Dr. Patrick Njoroge who chairs the Monetary Policy Committee says the decision is informed by well anchored inflation expectations, and expectations of a continued robust economic performance.

MPC expect inflation to remain within the target range of 2.5%-7.5% helped by muted demand pressures and the government’s measures to lower electricity tariffs and stabilize fuel prices.

In addition, the policymakers acknowledged strong growth in exports that increased 11.1% in 2021 as compared to a growth of 3.2% in 2020.

Exports of horticulture and manufactured goods increased by 18.9% and 33.4%, respectively, in 2021 when compared to 2020.

Imports increased by 25.4% in 2021 compared to the decline of 12.4% in 2020, reflecting increased imports of oil and other intermediate goods.

MPC notes that the banking sector remains stable and resilient, with strong liquidity, lenders reviewing their business models to leverage on technology, enhanced capital and liquidity buffers.

Policymakers say private sector credit increased to 8.6% in December 2021, from 7.8% two months earlier, and the number of loan applications was strong in December, reflecting improved demand with increased economic activities.

However, CBK says uncertainties in the global economic outlook have increased, reflecting elevated risks from COVID-19 variants, supply chain disruptions, oil price volatility, and inflation developments.

The central bank for the 12th time in a row retained the benchmark lending rate at 7%.

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