CBK moves to tame the rate of inflation amid the high cost of living
CBK moves to tame the rate of inflation amid the high cost of living by raising lending rates to 8.25pc.
In response to increased pressure from inflation, the central bank’s Monetary Policy Committee increased the basic lending rate from 7.5 percent to 8.25 percent.
The 75 basis point small increase essentially indicates higher loan costs for Kenyan consumers.
The approach also complies with the majority of analysts’ predictions that the MPC would take action to tame the inflationary trend.
“The Committee noted the sustained inflationary pressures, the elevated global risks, and their potential impact on the domestic economy and concluded that there was scope for a tightening of the monetary policy in order to further anchor inflation expectations. In view of these developments, the MPC decided to raise the Central Bank Rate (CBR) from 7.50 percent to 8.25 percent,” CBK said in a statement Thursday.
However, it is anticipated that the tightening of liquidity will make it more difficult for people and businesses to acquire credit.
The CBR had remained unchanged at 7.5 percent since May 30, 2022, for a period of four months.
As a result of a failing maize flour subsidy, rising fuel prices, and a weakening shilling, Kenyan consumers experienced the sharpest increase in the cost of living in more than five years in August.
Inflation is expected to increase much more this month as a result of the State’s simultaneous increases in the price of electricity and fuel.
The rate of inflation was the fastest since June 2017 when it hit 9.21 percent in the run-up to the previous electioneering cycle.
“Overall inflation is expected to remain elevated in the near term, due in part to the scaling down of the government price support measures, resulting in increases in fuel and electricity prices, the impact of tax measures in the FY 2022/23 Budget, and global inflationary pressures,” CBK said.
Also read,
Hard times as Kenya’s debt hits a record Sh8.61trn
Ruto to utilize Safaricom’s Fuliza to disburse Hustler Fund
Outgoing Uhuru cabinet Secretaries to take home up to Sh20.8 million each
60-year-old Resilient African Monsoon elephant dies in drought-stricken Kenya
Follow us
