The Central Bank of Kenya (CBK) has increased the base lending rate to 10.5 per cent to curb inflation from 9.5 per cent in May.
“The Committee noted the sustained inflationary pressure, the increased risks to the inflation outlook, the elevated global risks, and their potential impact on the domestic economy,” CBK Governor Kamau Thugge said in a statement.
“The MPC thus concluded that there was scope for further tightening of monetary policy to anchor inflation expectations,” Thugge added.
“Overall inflation is expected to remain elevated in the near term, mainly due to the recent increase in electricity prices, the removal of the fuel subsidy, and associated second-round effects.
In addition, a mini-survey of the agriculture sector in the first half of June revealed that prices of some key food items, particularly sugar and maize, remain, elevated,” the CBK said in a statement.