NAIROBI, Sept 25 (Reuters) - Kenya’s central bank held its benchmark lending rate at 9.0 percent on Tuesday, saying there was need to monitor the impact of a new tax on petroleum products.
All 11 analysts polled by Reuters had been expecting the bank to hold the rate.
The government imposed a new 8 percent value added tax on all petroleum products this month to cover a gaping fiscal deficit, driving up prices of goods and services which could have an impact on inflation, policymakers said.
“There was need to monitor the second-round inflationary effects arising from the VAT on petroleum products, and any perverse response to its (MPC’s) previous decisions,” the committee said in a statement.
Policymakers embarked on an easing cycle in March, saying the economic growth was lagging its true potential. They have since cut the benchmark rate twice to 9.0 percent. (Reporting by Duncan Miriri Editing by Richard Balmforth)