Governor Patrick Njoroge also affirmed that Kenya’s current account deficit was expected to narrow to 5.5 percent of GDP in 2016 from 6.8 percent.
On Monday, the Central Bank of Kenya (CBK) cut the Central Bank Rate (CBR) from 11.50%, where it had been resting since last July, to 10.50%.
Njoroge said falling inflation offered room for an easing of monetary policy.
Inflation fell to 5.3 percent in April from 6.5 percent in March, well within the government’s target range.
The Kenyan shilling has remained stable this year, supported by a narrower current account deficit driven by cheaper oil imports, improved earnings from tea and horticulture exports and strong diaspora remittances.
These have helped boost foreign exchange reserves to $7.7bn, equivalent to 5 months of import cover, up from $7.4bn in March.
Analysts say Kenya’s 2016 GDP growth will be supported by infrastructure projects, rising agricultural production, low oil prices and a looser monetary policy, even though ongoing security issues and uncertainty surrounding next year’s elections pose downside risks.
In 2015, the Kenyan economy expanded 5.6%, which marked a pickup over 2014’s 5.3% reading.