CBK policy team keeps key rate at 8.5pc

The Central Bank of Kenya headquarters in Nairobi. CBK's monetary policy committee has maintained the benchmark rate at 8.5 per cent. Photo/FILE 

By David Mugwe

In Summary

• Njuguna Ndung'u, the CBK governor said the committee noted that projected weak recovery in the global economy and the instability in the Middle East and North Africa continue to pose risks to the macroeconomic outlook.

The Central Bank of Kenya (CBK) has maintained its benchmark rate at 8.5 per cent to mitigate against external events that might have an impact on the local economy in the coming months.

The Monetary Policy Committee (MPC), which is the policy setting organ of the banking regulator, on Tuesday said that it had decided to maintain the Central Bank Rate as it has been since May this year.

Njuguna Ndung'u, the CBK governor said the committee noted that projected weak recovery in the global economy and the instability in the Middle E
ast and North Africa continue to pose risks to the macroeconomic outlook.

“The recession in the Eurozone has slowed down export earnings from tourism while the temporary partial shutdown of the US government in October 2013 could affect diaspora remittances from North America in the short-term,” said Prof Ndung'u in a statement.

Earnings from tea and coffee exports are expected to be lower going forward following a decline of prices in international markets.

The United States government shutdown which ended on October 16 resulted in the loss of income mainly for individuals employed by the federal government and this could affect the amount of money Kenyans living and working in America send home.

“These developments coupled with the volatile international oil prices remain a threat to price stability,” said Prof Ndung'u. 

READ: Banks eye CBK policy team for interest rate direction