Kenya raises key interest rate to tame inflation

Kenya raises key interest rate to tame inflation

The Central Bank of Kenya on Monday raised its policy lending rate by a quarter percentage point to stem rising inflation and stabilise the shilling.

The increase in the central bank rate (CBR) to 7.50 percent matched the expectations of most analysts who had said they expect the policy rate to rise further in the coming months as the country fights off inflationary pressure brought home by rising oil prices and the economic fallout from the Russia-Ukraine onslaught which has hit food supplies.

Read: Eyes on EA central banks as inflation bitesThe inflation — a measure of annual changes in the cost of living— hit 6.47 percent in April from 5.56 percent in the prior month, the Kenya National Bureau of Statistics reported last month.

This was the highest pace since last September when it stood at 6.91 percent.

CBK’s inflation-targeting Monetary Policy Committee (MPC) said that while the economy shows strong resilience, shocks from food shortages, a weak shilling, and imported inflation in the form of surging food prices could lead to a spike in consumer goods prices if the liquidity is not tightened.“The Committee noted the elevated risks to the inflation outlook due to increased global commodity prices and supply chain disruptions,