The Central Bank of Kenya has trimmed its Central Bank Rate (CBR) by 150 basis points to 16.5 percent as inflation has fallen sharply towards the target and price stability looks achievable.
Following a meeting of the central bank's Monetary Policy Committee on July 5, the bank said confidence in the economy remained strong and was expected to remain resilient and fiscal measures by the government were consistent with monetary policy objectives and should ensure that domestic debt remained within the medium-term strategy.
"The Committee observed that the monetary policy measures adopted continued to deliver favorable macroeconomic outcomes," the bank said, adding: "Inflation has continued to decline while the exchange rate remains stable."
Month-on-month inflation eased to 10.05 percent in June from 12.22 percent in May, and 3-month annualized inflation declined to 1.67 percent from 10.57 percent, reversing an upward trend that had worried the committee at its previous meeting, the bank said.
The bank noted the weakening outlook for global economic growth and a slowdown in activity in emerging market economies, which post a risk to demand for Kenya's exports and earnings from tourism.
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