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Kenya central bank holds it benchmark lending rate at 7.0%

(Adds context, analyst comment)

NAIROBI, Nov 29 (Reuters) – Kenya’s central bank held its benchmark lending rate at 7.0% on Monday, its Monetary Policy Committee said, citing “anchored” price increases and early indications of the economy benefiting from an accommodative stance.

The decision to hold rates is the 11th in a row. A Reuters poll of analysts and market participants had predicted the “Hold” decision.

Year-on-year inflation edged down to 6.5% in October from 6.9% the previous month, the committee said in a statement, as the government’s efforts to stabilise retail fuel prices started to have an impact.

Economic growth rebounded strongly in the second quarter of this year, it said, as activities resumed following pro-longed lockdowns in the previous period to curb the spread of the coronavirus.

Policymakers cut rates sharply nearly two years ago when the East African nation reported its first case of COVID-19, and they have maintained that dovish stance since May last year.

“Leading economic indicators showed continued robust performance,” the committee said, adding that the banking sector remained stable and resilient.

The emergence of a new variant of the coronavirus, Omicron, could however curb the prospects of a recovery in Kenya’s tourism sector and the entire economy, said Razia Khan, chief economist for Africa and Middle East at Standard Chartered in London.

(Reporting by Duncan Miriri and George Obulutsa, Editing by Gareth Jones and Angus MacSwan)


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