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Kenya Monetary Policy March 2022

Kenya: Central Bank stands pat in March

The Monetary Policy Committee (MPC) of the Central Bank of Kenya stood pat at its 29 March meeting, leaving the Central Bank Rate unchanged at 7.00%. This marked the 13th consecutive hold, which was in line with market analysts’ expectations.

In deliberating its decision, the Bank noted that inflation expectations in the near term remained anchored within its range, despite the war in Ukraine increasing upside risks to the outlook. According to the Bank, the anchoring of inflation expectations is partially due to the government’s policy interventions, such as measures to stabilize fuel prices and lower electricity tariffs. As such, the Bank had room to stand pat. Regarding the economy, the Bank noted that high-frequency data revealed an improved performance in the first quarter, and that “the economy is expected to remain resilient supported by recovery in agriculture and continued strong performance of the services sector despite the downside risks to global growth in 2022.”

In the press release, the MPC gave no clear guidance on the direction of monetary policy going forward. The Bank did reiterate its commitment to “closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and […] take additional measures as necessary.” Looking ahead, panelists expect, on average, that the Bank will commence a tightening cycle this year to ensure inflation remains within its informal 2.5–7.5% target range amid a continued economic recovery.

The next meeting is scheduled to take place in May.

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