NAIROBI, Jan. 26 (Xinhua) -- The Central Bank of Kenya (CBK) Wednesday retained its benchmark lending rate at 7 percent to bring inflation towards the medium-term target amid economic rebound.
Patrick Njoroge, CBK Governor, who chaired the Monetary Policy Committee (MPC) meeting in Nairobi said inflation expectations remain anchored within the target range, and leading economic indicators showed continued robust performance.
"The Committee will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and stands ready to take additional measures as necessary," Njoroge said in a statement issued in the Kenyan capital, Nairobi.
The MPC, the apex bank's top monetary policy organ noted the robust implementation of the financial year 2021/22 Government Budget, particularly the strong rebound in revenue performance to December 2021 reflecting the pickup of economic activity and improvement in the business environment.
The MPC's meeting reviewed the outcomes of its previous decisions, including measures implemented to mitigate the adverse economic effects and financial disruptions from the pandemic.
It said overall inflation declined to 5.7 percent in December 2021 from 5.8 percent in November, mainly due to lower food prices.
"Inflation is expected to remain within the target range in the near term, with muted demand pressures and the impact of Government measures to lower electricity tariffs and stabilize fuel prices," Njoroge said.
According to Njoroge, the CBK foreign exchange reserves, which currently stand at 8.29 billion (5.07 months of import cover), continue to provide adequate cover and a buffer against short-term shocks in the foreign exchange market.
He said the banking sector registered a strong performance in the year ended December 31, 2021, with the asset base increasing by 11.1 percent from 5.4 trillion shillings (47.66 billion U.S. dollars) at the end of 2020 to 52.8 billion dollars. And real GDP grew by 9.9 percent in the third quarter of 2021 compared to a contraction of 2.1 percent in the third quarter of 2020.
This, he said, was driven by the strong recovery of the services sector particularly transport and storage, education, information and communication, wholesale and retail trade, and the improved performance of the manufacturing and construction sectors.
Njoroge said the economy is expected to remain strong in 2022, supported by continued strong performance of the services sector, recovery in agriculture, and an improvement in global demand.