Summary:
- Kenya’s central bank increases its benchmark lending rate by 2 percentage points to 12.5%, citing exchange rate depreciation and aiming to anchor inflation expectations towards the target range mid-point of 5.0 percent.
Kenya’s central bank raised its benchmark lending rate (KECBIR=ECI) by 2 percentage points to 12.5% on Tuesday, saying exchange rate depreciation was exerting upward pressure on domestic prices.
“There is need to adjust the monetary policy stance to address the pressures on the exchange rate and mitigate second round effects including from global prices,” the central bank said in a statement.
“This will ensure that inflationary expectations remain anchored, while setting inflation on a firm downward path towards the 5.0 percent mid-point of the target range.”
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It is the first time the Central Bank of Kenya has changed the rate since June when it raised it by 1 percentage point. In August and October it kept it unchanged.
Reported by Reuters Editing by Busiinge Aggrey
