NAIROBI, Central Bank of Kenya (CBK) Governor Patrick Njoroge says the bank’s Monetary Policy Committee has retained the benchmark interest rate at 10 per cent keeping it at the same level for 16 months.

The members of the rate-setting MPC said here Friday their decision was informed by muted inflationary pressures, a stable foreign exchange market and increased flow of credit to the private sector.

The year-on-year rate of inflation has slowed from a high of 9.2 per cent in June to the current 5.72 per cent, its lowest level in 17 months, helped by lower food prices after good rains boosted harvests.

This is despite an increase in fuel prices, which the central bank expects to be muted by lower food prices. The CBK says the foreign exchange market has remained stable, supported by strong remittances by the Diaspora, tea and horticultural exports as well as the tourism recovery.

Despite the country’s current account deficit widening by 10 basis points to 6.5 per cent of gross domestic product (GDP), it is expected to narrow to 6.2 per cent of GDP next month as a result of a slowdown in imports related to the construction of the multi-billion US dollar Standard Gauge Railway (SGR) project, whose main section between Nairobi and Mombasa has been completed.

The Central Bank also notes that credit to the private sector grew 2.0 per cent in the 12 months to October compared with 1.7 per cent in the 12 months to September. This means private sector credit growth has maintained its upward trend for the second month in a row.

The Central Bank cited uncertainties over United States economic policies and the post-Brexit resolution as among global risks for Kenya. Based on muted inflationary pressures, a stable shilling, private sector credit growth and a resilient banking sector, policymakers of the Central Bank have retained the benchmark lending rate at 10 per cent keeping it at the same level for 16 months.