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(Xinhua) -- The Central Bank of Kenya (CBK) on Monday retained its benchmark lending rate at 9.0 percent due to the relatively stable inflation rate.

 

Patrick Njoroge, CBK governor, who chaired the Monetary Policy Committee (MPC) meeting in Nairobi, said the apex bank will continue to closely monitor developments in the global and domestic economy, including any perverse response to its previous decisions.

 

"The MPC concluded that the current policy stance remains appropriate, and therefore decided to retain the CBR (central bank rate) at 9.00 percent," Njoroge said in a statement issued in Nairobi.

Njoroge added that the meeting was held against a backdrop of domestic macroeconomic stability, sustained optimism on economic growth prospects, heightened global uncertainties and volatility in international markets.

 

According to the MPC, inflation expectations remained well anchored within the target range, and that the economy was operating close to its potential.

 

The committee also noted the prospective tightening of fiscal policy which would provide scope for accommodative monetary policy in the near term.

 

"Nevertheless, there is need to remain vigilant on the possible effects of the increased uncertainties in the external environment," Njoroge said.

 

He observed that month-on-month overall inflation remained within the target range in July and August 2019, and is well anchored.

 

"The inflation rate fell to 5.0 percent in August from 6.3 percent in July, reflecting decreases in the prices of both vegetable and non-vegetable food crops due to improved supply," the bank said.

 

The governor noted that the overall inflation is expected to remain within the target range in the near term mainly due to expectations of lower food prices with the expected favorable weather conditions, and lower electricity prices reflecting the reduced usage of expensive power sources.

 

"The recent increase in international oil prices is expected to exert moderate upward pressure on fuel prices, but with limited pass-through effects on inflation," said the apex bank.

 

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