NAIROBI (Xinhua) --
The Central Bank of Kenya (CBK) on Monday
maintained the country’s benchmark lending rate at 10 percent to
help check inflation which dropped to 9.21 percent in June from
a five-year high of 11.70 percent in May.
The CBK Governor Dr
Patrick Njoroge, who chaired the Monetary Policy Committee (MPC),
said the apex bank will continue to closely monitor developments
in the global and domestic economy, and stands ready to take
additional measures as necessary.
is expected to continue to decline over the next few months,
supported by lower food and fuel prices,” Njoroge said in a
statement issued after the monetary policy organ’s meeting in
He said the meeting
was held against a backdrop of declining food prices, sustained
macroeconomic stability, and continued resilience of the
overall inflation fell to 9.2 percent in June from 11.7 percent
in May 2017, largely due to decreases in food prices,
particularly Irish potatoes, kales, tomatoes, cabbages, sifted
maize flour, sugar, and milk.
The fall in prices
of these key food items reflected the impact of the recent
rains, and Government measures.
inflation has remained below 5 percent over the last seven
months, suggesting that demand pressures remain subdued.
Njoroge said the
banking sector remains resilient with improved performance
indicators. Average commercial banks’ liquidity and capital
adequacy ratios stood at 44.7 percent and 19.6 percent,
respectively, in June.
“The distribution of
liquidity in the sector has also improved, although credit risk
remains elevated as large corporates restructure their
borrowings,” he said.
According to CBK,
the ratio of gross non-performing loans to gross loans rose to
9.9 percent in June from 9.6 percent in April, partly reflecting
a decline in gross loans.
However, the ratio
of net non-performing loans to gross loans has remained below 5
percent since December 2016.
The apex bank said
growth of credit to the private sector fell further to 2.1
percent over the 12 months to May, partly due to significant
repayments in manufacturing, transport and communication, and
developments in the trade sector.
continues to monitor the implications of the capping of interest
rates on lending and the transmission of monetary policy,” he
The economy remained
resilient in the first quarter of 2017, recording a growth rate
of 4.7 percent relative to the first quarter of 2016.
the CBK said, was supported by stable macroeconomic conditions,
despite poor performance of the agriculture sector due to
adverse weather conditions.
was recorded in the transport, real estate, construction, mining
and quarrying, tourism, and information and communication
sectors. This is despite the impact of the slowdown in private
sector credit growth,” he said.