(Updates with comments on inflation)
NAIROBI, March 27 Kenya's central bank held its
benchmark lending rate at 10 percent on Monday as
expected, saying high food prices were to blame for a rise in
the rate of inflation.
All 10 analysts polled by Reuters last week expected
policymakers to hold the rate for the third time in a row, after
a drought drove up food prices.
The bank's Monetary Policy Committee (MPC) said inflation,
which surged to 9.04 percent in February, was likely to remain
outside the government's preferred band of 2.5-7.5 percent in
the near term, even as demand in the economy remained low.
"The committee remains concerned about the prevailing
uncertainties, including the impact of the interest rate caps on
the effectiveness of monetary policy," the MPC said in a
The government capped commercial rates at 4 percentage
points above the central bank rate last September, worsening
already sluggish private sector credit growth.
(Reporting by Duncan Miriri; Editing by Catherine Evans)