By George Obulutsa and Vincent Mumo Nzilani
NAIROBI, Dec 9 (Reuters) – Kenya’s central bank reduced its benchmark lending rate by 25 basis points to 9.0% on Tuesday, its ninth rate cut in a row as it tries to stimulate bank lending and support economic growth.
East Africa’s biggest economy has been growing steadily by around 5% in annual terms, but there are risks on the horizon including a potential drought flagged by the country’s weather service.
“This (rate cut) will augment the previous policy actions aimed at … supporting economic activity, while ensuring inflationary expectations remain firmly anchored, and the exchange rate remains stable,” the Central Bank of Kenya said in a statement.
The bank kept its growth forecasts for this year and next at 5.2% and 5.5% respectively, while acknowledging the risks including adverse weather conditions.
Annual inflation was at 4.5% year on year in November, comfortably within the 2.5%-7.5% target band.
“Inflation is expected to remain below the midpoint of the target range in the near term, supported by lower prices of processed food items, stable energy prices and continued exchange rate stability,” the central bank said.
It forecast a current account deficit of 2.3% of gross domestic product in 2025 and 2026.
At its last rate-setting meeting in October it projected a deficit of 1.7% of GDP in 2025 and 1.8% in 2026.
(Reporting by George Obulutsa and Vincent Mumo Nzilani; Editing by Alexander Winning and Hugh Lawson)
