CBK retains policy rate at 8.5pc

Money Markets

The Central Bank of Kenya. PHOTO | FILE 

By NEVILLE OTUKI, notuki@ke.nationmedia.com

In Summary

• Decision made on the back of a stable inflation rate and the need to shield the economy from possible external disruptions in the face of divergent monetary policies adopted by major global economies.

The Central Bank of Kenya (CBK) Thursday retained the policy rate at 8.5 per cent for a record 19th month in a row.

The monetary policy committee said it made the decision on the back of a stable inflation rate and the need to shield the economy from possible external disruptions in the face of divergent monetary policies adopted by major global economies.

It cited, amongst others, the recent European Central Bank’s decision to buy government bonds through quantitative easing to stimulate growth and the ending of the Swiss franc cap against the euro.

“However, the committee noted that while the US has been contemplating monetary policy tightening, ECB has embarked on QE, suggesting that there remain mixed signals for the global economy,” the report says.

The rate has remained unchanged since July 2013. “In view of these risks, the committee decided to retain the CBR at 8.50 per cent,” said Njuguna Ndung’u, the outgoing MPC chairman.

The committee says inflation has remained within target at 5.61 per cent this month, although slightly up from last month’s 5.53 per cent and 6.02 per cent last December.