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Kenya Monetary Policy March 2021

Kenya: Central Bank leaves rate unchanged in March

At its 29 March meeting, the Monetary Policy Committee of Kenya’s Central Bank decided to maintain the Central Bank rate unchanged at 7.00%, marking the seventh consecutive hold, after having cut it by 125 basis points during March–April last year.

The decision reflected the Bank’s assessment that the policies implemented since March 2020 have been sufficient to weather the economic and financial disruptions resulting from the health crisis. Moreover, the Bank noted the economy continued to recover in the final quarter of 2020 and in Q1 2021, and it expects a strong rebound this year supported by the services sector. However, the Bank noted that the outlook remains uncertain, with the recovery conditional on the success of the vaccine rollout and the measures imposed to contain the spread of the virus. Regarding inflation, the Bank commented that it remains well anchored and it is expected to stay within the 2.5%–7.5% target range in the near term.

In terms of future guidance, the Bank stated that it “will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy”. The tone, similar to previous communiqués, suggested that future policy moves will be closely related to the evolution of the pandemic and the vaccination program, as the Bank “stands ready to take additional measures as necessary”.

The next meeting is scheduled to take place in May.

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