Dr Patrick Njoroge, the CBK governor. FILE PHOTO | NMG
Central Bank of Kenya (CBK) governor has again downplayed the
potential negative impact on the economy from the repeat president
election, which has heightened uncertainty in the market.
Patrick
Njoroge said in an interview with Bloomberg TV in London Tuesday that
while liquidity in the country’s money markets is tight at the moment,
it has “nothing to do with the political circumstances.”
Business
leaders and experts have warned that a long drawn-out election period
could raise risk to business and negatively impact the economy.
However,
the bullish Dr Njoroge admitted the central bank may slightly lower its
2017 economic growth forecast to reflect uncertainty around the
elections.
“The rate could be south of 5.5 per cent,
but definitely above five per cent,” Dr Njoroge was quoted saying. The
government has already cut the forecast from 5.9 to 5.5 per cent.
The
governor had earlier argued that favourable weather for agriculture and
sustained public investment in infrastructure development would help
cushion the economy from knocks of prolonged electioneering.
He
reiterated that despite the drought, food inflation will not have
knock-on effects on macro-economy if the monetary policy was managed
correctly.
“We are not worried about that and at this
moment inflation is well-anchored,” he was quoted. A prolonged drought
early this year affected food production leading to a sharp rise in
inflation.
The country’s overall inflation peaked at 11.7 per cent in May
but dropped in June and July as the return of rains improved food
supplies. Inflation slowed to 7.1 per cent last month.
The
governor’s comments came a day before top electoral official Roselyn
Akombe quit IEBC, heightening political tensions ahead of the fresh
presidential election scheduled for October 26.
Traders
told Reuters the central bank had sold dollars in the foreign exchange
market after the shilling weakened on news that an election official had
resigned.
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