NAIROBI, May 27 (Xinhua) -- The Central Bank of Kenya (CBK) on Monday maintained benchmark lending rate at 9.0 percent to help check inflation.
Patrick Njoroge, CBK governor, who chaired the Monetary Policy Committee meeting in Nairobi, said the apex bank will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary.
"The Committee noted that inflation expectations remained well anchored within the target range, but there is need to remain vigilant on possible spillovers of recent food and fuel price increases," Njoroge said in a statement issued in Nairobi.
He said the monetary policy organ further noted that the economy was operating close to its potential, adding that the current policy stance remains appropriate.
The central bank will continue to monitor any perverse response to its previous decisions, Njoroge said.
Month-on-month overall inflation rate stood at 6.6 percent in April, compared to 4.4 percent in March, mainly reflecting increases in food prices attributed to depressed supply of vegetables and other fast-growing food crops following the delayed onset of the long rains, the bank said.
Food inflation rose to 7.7 percent in April, from 2.9 percent in March, but non-food-non-fuel inflation remained below 5 percent, indicating that demand pressures and the spillovers of the rise in food and fuel prices were muted.
"Overall inflation is expected to remain within the target range in the near term, largely due to expectations of lower food prices following improving weather conditions, and lower electricity prices with the reduced usage of expensive power sources," Njoroge said.
He said a timely release of maize stocks from the government grain reserve will support the stability of food prices.
Njoroge said the meeting was held against a backdrop of domestic macroeconomic stability, sustained optimism on the economic growth prospects, improving weather conditions in most parts of the country and increased uncertainties in the global financial markets.
He said the economy recovered strongly in 2018, with real gross domestic product (GDP) surging 6.3 percent, up from 4.9 percent in 2017.
This, the governor said, reflected a strong recovery in agriculture, manufacturing, and a buoyant services sector, particularly trade, information and communication, accommodation and restaurants, transport and storage, and finance and insurance.
"Leading indicators of economic activity show that growth remained resilient in the first quarter of 2019, despite the delayed onset of the long rains," he said.
The apex bank said growth in 2019 is expected to be supported by agricultural production, robust growth of small and medium-sized enterprises and the service sector, increased foreign direct investment, and a stable macroeconomic environment.
"Additionally, the continued alignment of government spending to the Big 4 priority sectors is expected to boost economic activity in manufacturing, agriculture, construction and real estate, and health sectors," Njoroge said.
