Kenya’s Monetary Policy Committee will meet in November for the bi-monthly meeting. It is the first MPC meeting after Parliament repealed the rate cap law.
According to CBK Governor Patrick Njoroge, the committee has more clarity to make monetary policy decisions. Earlier, the MPC expressed concerns that cutting the interest rate could result in adverse effects due to the interest rate cap law.
“The MPC had signalled that they see the potential for easing … monetary policy, in part, because the fiscal policy was being tightened.” Patrick Njoroge told Reuters in an interview in Singapore.
Patrick Njoroge is also the chairperson of the MPC.
According to Njoroge, the committee has a clear direction on monetary policy after the repeal of the interest ceiling. MPC will further rely on economic data, among other criteria, to make the decision later this month.
“There was still the question about a perverse monetary reaction. Now that the repeal has come through, there isn’t any question anymore about the perverse reaction to monetary policy, so the direction is clear.”
Finally, Central bank is looking to engage other partners like the IMF before making the decision. The rate cap repeal will set a pace to unlock a stand-by credit facility with IMF.
The interest rate cap repeal helped return control of monetary policy to the Central Bank Committee after three years of weakened regulations. Henceforth, the CBK can resume its bigger role to use monetary policy to control inflation and money circulation.
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