The Central Bank of Kenya (CBK) held the base lending rate at 11.5% in its Monetary Policy Committee (MPC) meeting yesterday, citing the fall in inflation last month and reduced volatility in the currency market.
CBK governor Dr Patrick Njoroge said in a statement that the monetary policy measures taken during its last two meetings in June and July have stemmed the volatility. He added that the MPC also held the rate steady, contrary to analysts’ expectations, to allow the economy to factor in the effects of the previous rate hikes.
The MPC also pointed at the expected improvement in performance of key sectors of the economy as a reason for resisting a third rate hike in three months. “The CBK’s Market Perceptions Survey of July 2015 showed optimism for increased foreign direct investment and recovery of key sectors of the economy. Early indications point to improved performance in tourism and agriculture,” said Dr Njoroge.
The committee further noted that rising diaspora remittances will offer additional support to the currency and the current account.
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