Excerpt from the statement by the Central Bank of Kenya:
The overall month-on-month inflation increased slightly from 6.27 percent in March 2014 to 6.41 percent in April 2014 largely reflecting an increase in transport costs. Nevertheless, month-on-month non-food-non-fuel (NFNF) inflation, which measures the impact of monetary policy, declined from 4.98 percent to 4.53 percent during the period. This reflects the fact that the monetary policy stance continues to support a stable inflation rate.
On the global scene, the Committee noted that the global economy was projected to grow from an estimated 3.0 percent in 2013 to 3.6 percent in 2014 largely reflecting the continued recovery of advanced economies. Notably, growth in the Eurozone had turned positive partly reflecting a pickup in domestic demand. Similarly, growth in Sub-Saharan Africa was projected to accelerate from 4.9 percent to 5.4 percent in the period.
This outlook for the global economy is expected to benefit Kenya's exports and support exchange rate stability. In addition, the commitment by the United States to a gradual and measured tapering off of the economic stimulus programme will dampen any volatility in the global currency and financial markets.
However, the heightened Russia-Ukraine political situation coupled with the persistent instability in the Middle East and North African region remains a threat to the stability of international oil prices and the overall price stability objective.
The Committee concluded that the monetary policy measures had continued to deliver the desired price stability. The monetary policy path remains credible despite the slight rise in overall inflation. It therefore decided to retain the CBR at 8.50 percent so as to continue anchoring inflationary expectations and sustain price stability.