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Central Bank concern at inflationary pressure

03 October 2013, 10:44

Nairobi - The Central Bank of Kenya (CBK) has raised concerns over inflation pressure arising from the recent implementation of the Value Added Tax law and the high current account deficit.

The apex bank warned the two factors remained potential threats to macroeconomic stability.

Continued volatility in the international oil prices, the bank added, and resultant effects of global slowdown risked derailing the country’s economy.

“Economic activity in the Euro zone remains weak while instability in the Middle East and North Africa (MENA) will escalate,” the bank’s Monetary Policy Committee (MPC) stated.

It added the implementation of the VAT law would contribute to short-term increases in inflation.

The bank further stated that there was a huge possibility of the country’s foreign exchange being affected, especially the inflows received from tea exports in the MENA region.

CBK further noted that there had been little growth in the exports from the country due to little diversification from the common agriculture sectors as tea, coffee, and horticulture.

The concerns raised by the central bank come amid worries by Kenyans that the high living standards had increased their burdens.

– CAJ News



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