January 30, 2023

BoM raises Key Repo rate raised by 0.50%

At the meeting of the Monetary Policy Committee (MPC) held on 14 December 2022, it was unanimously agreed to raise the Key Repo Rate (KRR) by 50 basis points (0.50%). The KRR now stands at 4.5%.

It will be recalled that the penultimate revision made to the KRR was on 4 November 2022 when it was revised by 100 basis points.

The latest revision made to the KRR is aligned to the post-pandemic normalisation process in the light of the pace of economic recovery and inflationary pressures amid a difficult global economic backdrop still marked by geopolitical conflict. Also, it follows similar stance being adopted by major central banks across the globe namely the US FED, the European Central Bank and the Bank of England, with the objective of minimizing yield differences that may arise locally if unaddressed.

On the local front, the MPC noted that economic recovery is well underway leading to a much-welcomed decline in unemployment rate to 8.1% in Q2 2022 (compared to 8.7% in Q1 2022). Tourist arrivals are expected to be on the rise, while the Global Business sector continues to attract robust financial flows. The MPC projects local real GDP growth for 2023 to be around 5%.