The bi-monthly monetary policy committee meeting is set to take place on the 27th of this month. The Central Bank committee headed by Governor Patrick Njoroge meets every two months to evaluate economic conditions in Kenya and set the Central Bank Rate.
During the last meeting held on 25th November, the team lowered the Central Bank Rate by 50 basis points to 8.5%. It was the first time that the commitee reviewed the rate in 16 months, possibly influenced by the interest rate cap repeal. The committee lauded the removal of lending rate caps as the move “restored clarity of monetary policy decisions.”
Analysts have expressed varied views on the next move by the Monetary Policy Committee in the upcoming January meeting.
According to Churchill Ogutu, a senior research analyst at Genghis Capital, as reported by Bloomberg, “The central bank will probably wait to assess the impact of the 50 basis-point cut two months ago before easing again”
However, other observers expect the CBK to lower the policy rate as a measure to encourage economic growth.
Vinita Kotedia of EFG Hermes Kenya told Bloomberg, “The Central Bank could cut its policy rate by another 50 basis points to 100 basis points by the end of the first quarter.”
Data from the Kenya National Bureau of Statistics shows that 2019 third quarter economic growth dipped to 5.1% contrary to CBK expectations of stronger growth in the third and fourth quarters of 2019.
The slower than expected growth in the three months to September 2019 lowered Kenya’s expectation of 6% GDP growth in 2019 as predicted by the Central Bank of Kenya in the first half of 2019.
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