In the statement of the latest monetary policy for the next six weeks, the central bank said that before today's decision, the Monetary Policy Committee (MPC) found that inflation had begun to decline significantly from January 2024.
"Committee noted that despite the sharp slowdown in February, the level of inflation remains high and the outlook is risk-sensitive given the high inflation expectations."
Due to tensions in the Red Sea, the upward trend in global oil prices threatens to increase the country's imports and increase imported inflation.
The central bank said the incoming data supports the Monetary Policy Committee's previous expectations of a moderate rebound in economic activity in FY24, with real GDP growth remaining in the 23% range.
The Committee noted several important developments that affected the macroeconomic outlook since its last meeting at the end of January.
First, the latest data moderate recovery in economic activity, driven by a rebound in agricultural production.
Second, the external current account balance was better than expected, which helped preserve foreign exchange reserves despite weak capital inflows.
Third, while business inflation expectations have risen steadily since December, consumer inflation expectations rose slightly in March.
Finally, global oil prices rose while overall developments in commodity prices remained favourable; due to continued instability in the Red Sea. In addition, major central banks in developed and emerging markets maintained cautious monetary policies amid uncertainty over inflation expectations.
