The Monetary Policy Committee at its May 14-15 meeting decided to maintain the policy rate at 9.75%. After trending downwards for seven consecutive quarters, annual overall inflation edged up in the first quarter of 2018, but remained within the 6-8% range. Inflation rose in March to 7.1% driven by upward adjustment in fuel prices as well as seasonal reduction in supply of food items, in particular vegetable and maize grain. Current projections indicate that Inflation will rise above 7% during the second and third quarters of 2018, but decline there afterwards towards the lower bound of the 6-8% target range over the forecast horizon. Real sector indicators show a steady pick up in annual economic growth, although growth remains fragile. Weak credit growth to the private sector, mainly driven by higher than programmed budget deficits, high lending rates and rising non-performing loans contributing to this fragility. The Bank will continue to monitor closely domestic and external sector developments and stand ready to implement appropriate measures to maintain price and financial system stability to support Economic Growth.
Download the MPC Statement below.