Kenya raises inflation goal to 9% from 5% for fiscal 2011-12

The Kenyan government increased its inflation target to 9 percent from 5 percent after the central bank raised interest rates to a record high to curb prices.

The central bank will aim to keep inflation within two percentage points of that target, Governor Njuguna Ndung’u said in a statement on the bank’s website today.

The bank raised Kenya’s benchmark rate by 5.5 percentage points to 16.5 percent this month to rein in inflation and support the shilling, which fell to a record low of 106.75 per dollar on Oct. 11. The bank’s next rates meeting is on Dec. 1.

Inflation in East Africa’s biggest economy rose for a 12th straight month to 18.9 percent in October as the worst regional drought in 60 years damaged crops and fuel prices climbed.

The central bank’s primary objective is to keep inflation stable, which will encourage investment and lead to faster economic growth, Ndung’u said.