CBK governor Njuguna Ndung’u: The monetary policy stance has anchored inflationary expectations and continues to deliver the desired objective of price stability. Photo/FILE
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Monetary Policy Committee (MPC) on Tuesday held the central bank rate (CBR) at 8.5 per cent, the level it is has maintained since May last year.
Prof Ndung’u said the MPC noted that projected slowdown in growth of emerging market economies and the normalisation of financial conditions in advanced countries could pose risks to the financial markets.
The Central Bank of Kenya (CBK) has held steady its benchmark lending rate citing stable inflation and exchange rate.
The banking sector regulator’s Monetary Policy Committee (MPC) on Tuesday held the central bank rate (CBR) at 8.5 per cent, the level it is has maintained since May last year.
Njuguna Ndung'u, the CBK governor and chair of the policy setting organ said the committee noted that overall inflation had continued to decline and remained within the target range, and at the same time, the exchange rate stability was sustained during the period, which reduced the risk of imported inflation.
“The committee concluded that the monetary policy stance had anchored inflationary expectations and continues to deliver the desired objective of price stability. The committee therefore decided to retain the CBR at its current level of 8.50 per cent to encourage a full impact of this monetary policy path to be felt throughout the economy,” said Prof Ndung'u in a statement.
Inflation stood at 7.15 per cent in December, having fallen for a third consecutive month.
Prof Ndung’u said the MPC noted that projected slowdown in growth of emerging market economies and the normalisation of financial conditions in advanced countries could pose risks to the financial markets.
“However, the projected robust growth of sub-Saharan Africa economies in 2014 endorsed a stable outlook for the exchange rate with expectations for increased foreign exchange inflows from regional trade,” said Prof Ndung’u.
MPC also noted that the Eurobond that Kenya targets to sell at the end of this month or early next month will further bolster the country’s foreign exchange reserves and support exchange rate stability.
