By George Mwangi
Specially for Dow Jones Newswires
NAIROBI – Kenya‘s central bank raised interest rates on Wednesday in a bid to tame inflationary pressures.
The central bank raised its key interest rate by 50 basis points from 8.25% to 8.75%, the monetary policy committee said in its policy statement.
“Noting the ongoing inflationary pressures, heightened global risks and their potential impact on the domestic economy, the committee concluded that there is scope for further monetary tightening to anchor inflation expectations,” the bank said.
Kenya’s inflation rate accelerated to 9.6% in October from 9.2% in September, on the back of higher food and fuel prices, it said.
Food inflation rose to 15.8% in October from 15.5% in September, mainly due to prices of corn and milk following reduced supply due to poor rainfall, and cooking oils and wheat products due to the impact of international supply chain disruptions, it said.
Fuel inflation rose to 12.6% in October from 11.7% in September, mainly due to reductions in fuel subsidies, electricity price hikes due to higher tariffs and increased transportation costs, it said.
The committee will meet again in January but stands ready to meet again sooner if necessary, the bank said.
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