Kenya’s Central Bank has retained its Benchmark rate at 10.0 percent in order to anchor inflation expectations which was expected to remain within the Government target range in the short term. The Bank also noted increased uncertainties with regard to the prevailing drought conditions and risks in the global markets.
In its monetary policy statement, the bank said;
“The Committee will continue to closely monitor developments in the domestic and global economies, and stands ready to take additional measures as necessary. The MPC considered the Kenya Bankers Reference Rate (KBRR) which was introduced to provide a transparent credit pricing framework. In view of the adoption of the new law capping interest rates the CBK decided to suspend the KBRR framework”
The Bank also said that its foreign exchange reserves currently stand at USD6,936 million equivalent to 4.5 months of import cover, which together with the Precautionary Arrangements with the International Monetary Fund (IMF) continue to provide an adequate buffer against short-term shocks.
“The resilience of the economy, and international confidence in the country’s macroeconomic policies was underscored by the successful completion of the first review of Kenya’s economic programme on January 25, 2017, by the IMF” CBK.
According to the bank, available data was inconclusive for assessing the impact of the recent capping of interest rates further saying that it will continue to closely monitor and assess the impact of the interest rate caps.
