Kenya’s decision to peg its interest rate cap on the base lending rate has eroded decision making instruments in the hands of the Central Bank of Kenya nearly paralysing the execution of monetary policy, Citibank economists have warned.
David Cowan, Citibank’s Africa economist, says in a newly-released note that the CBK’s decision to hold the rate flat amid high inflation and slow private sector credit growth is the clearest symptom of the paralysis that could in the long term have devastating consequences on the economy.
