The Central Bank of Kenya (CBK) has opted to maintain its benchmark signal rate at 10.50 percent, in a bid to stave off any increase in loan charges. The decision was made public on Tuesday by CBK Governor and Monetary Policy Committee (MPC) Chairman, Kamau Thugge, during the MPC meeting held in Nairobi. This stance comes amidst escalating international oil prices, global uncertainties, and a fragile global growth outlook.
The MPC meeting also discussed the ongoing effects of the existing monetary policy on Kenya's economy. The committee noted an anticipated decrease in inflation due to expected improvements in food supply and subsequent lower food prices. These improvements are backed by government initiatives enhancing supplies of key items such as maize and imported sugar.
Furthermore, Governor Thugge pointed towards an expected reduction in non-food non-fuel (NFNF) inflation, which would contribute to keeping overall inflation within the targeted range. The discussion also covered the rise in non-performing loans (NPLs), banks' provisions for these NPLs, and the tightening of monetary policy that took place in June 2023.
Governor Thugge emphasized that the MPC is prepared to enact additional measures as needed to respond to both global and domestic economic shifts. This commitment underlines the proactive stance of the CBK and its readiness to adapt its monetary policy in response to economic conditions.
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