By George Mwangi
Special to Dow Jones Newswires
NAIROBI--Kenya's central bank on Monday opted to maintain its accommodative monetary policy stance from March last year amid a fall in price pressures, keeping its key lending rate at 7.0%.
The rate was cut by 25 basis points in March of 2020 in order to mitigate the adverse effects of the Covid-19 pandemic.
The annual rate of inflation declined to 6.5% in October from 6.9% in September, mainly due to lower fuel prices, the bank said in its November Monetary Policy Committee statement.
"Fuel inflation declined to 9.6% in October from 11.1% in September, reflecting the impact of government measures to stabilize fuel prices," it said.
However, food inflation remained elevated at 10.6% in October, mainly due to depressed rainfall on some food items.
"The committee noted that the inflation expectations remained anchored within the target, and leading economic indicators showed continued robust performance," the bank said.
The economy rebounded strongly in the second quarter, as the easing of Covid-19 restrictions boosted activity. Gross domestic product grew 10.1% on year in the quarter, following a 4.7% contraction in the first quarter.
"This reflects the strong recovery of the services sector particularly transport and storage, education, information and communication, wholesale and retail trade, and the improved performance of the construction and manufacturing sectors," the bank said.
The leading economic indicators point to a continuing recovery in the second half of 2021, boosted by a full reopening of the economy, the bank said.
The committee will meet again in January, but remains ready to re-convene earlier if necessary, the bank said.
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(END) Dow Jones Newswires
11-30-21 0303ET
