CBK seen leaving interest rates unchanged in 2022

According to analysts, the lender of last resort is likely to keep an accommodative monetary policy stance to support economic recovery in the midst of Presidential elections this August.

According to analysts at Renaissance Capital, the monetary policy rate is likely to hold partly as a result of the election in spite of risks including inflationary pressure and a weakening Kenyan shilling.

“Our in-house view is that inflation will pick up to 6.2 per cent by the end of 2022 from our 2021 estimate of 5.7 per cent,” the investment bank said in a banking sector note on Wednesday.

On their part, analysts at AIB-AXYS Africa see a hold in the benchmark lending rate to at least mid-year as they find the current policy rate appropriate for growth.

“The Central Bank’s monetary policy decisions seek to maintain price stability and support economic activity. The currently accommodative monetary policy is likely to support growth. We expect the bank to maintain its accommodative monetary policy stance thus maintaining the CBR at seven per cent,” the analysts said in a macro-economic note.

Last year, CBK’s Monetary Policy Committee (MPC) met six times while keeping the benchmark lending rate unchanged each time.

The reserve bank is set to hold its first policy meeting of the year next Wednesday.

Among the top concerns for the bank at the meeting will be inflation, growth in private sector credit and a retreating local currency