The Central Bank’s Monetary Policy Committee has chosen to maintain the repo rate at 3.50%.
The repo rate is the rate of interest at which commercial banks can borrow funds overnight from the Central Bank.
In a Monetary Policy Announcement issued today, the MPC pointed to recent events in the Middle East and their impact on financial markets and the price of oil.
It also cited local factors such as the performance of the local energy and non-energy sectors.
It added that inflation remains contained, with headline inflation, rising to 1.4% (year-on-year) in May 2025 from 0.7% in January 2025.
Meanwhile, while core inflation (which excludes food prices) rose by 0.7%, while food prices increased by 4.1% in May.
On the financial front, it says credit extended to the private sector continued to expand robustly, with private sector credit from the consolidated financial sector rising by 9.1% (year-on-year) in April 2025, while business credit expanded by 11.4% , driven by loans to the finance and manufacturing sectors.
Meanwhile, consumer lending grew by 10.8%, while real estate mortgage loans increased by 6.9%.
The statement adds, “The Monetary Policy Committee (MPC) considered the uncertain outlook for global growth and inflation amidst trade policy developments and Middle East tensions. The MPC also noted the various reactions of central banks in the circumstances. Domestically, low inflation and favourable financial conditions have supported credit expansion. At the same time, the MPC noted the need for continued vigilance on credit quality given the increase in bank lending. The Committee also considered that in the coming months, the path of domestic fiscal financing would have important implications for liquidity management.”
