Kenya central bank holds benchmark lending rate at 10.0%

by Reuters 0

Kenya’s central bank held its main lending rate at 10.0 percent as expected on Monday, saying food supplies were likely to improve and lower pressure on inflation.

The Monetary Policy Committee said inflation rose by half a percentage point to 8.0 percent last month, mainly due to shortages of some foods, including tomatoes, because of transport disruptions after the Aug. 8 national election.

Demand for rice, wheat flour and other food had risen before the election, leading to shortages.

“A normalization of supply, the expected short rains, and supportive measures taken by the Government are expected to further lower food prices in the near term,” the MPC said.

Gross bad debts in the banking sector had jumped to 10.7 percent in the year to August from 9.9 percent in June, the committee said, adding private sector credit growth had ticked up to 1.6 percent in the year to August, from 1.4 percent in July.

The inching up of credit growth in the period was the first reversal of a downward trend since August 2015, the MPC said.

The market largely expected the bank to keep the rate it has held since November last year, the consensus estimate in a Reuters poll showed.

Reporting by Duncan Miriri; Editing by Andrew Heavens