Central Bank of Kenya Governor Patrick Njoroge.

The Monetary Policy Committee (MPC) will hold its next meeting on Monday, January 22, 2018, the Central Bank of Kenya (CBK) has said.

During its last meeting held two weeks ago, the MPC once more retained the base lending rate at 10.0%, saying inflationary pressures in the economy were muted, and inflation was expected to continue to decline in the short term.

According to the committee, month-on-month overall inflation fell to 5.7% in October 2017 from 7.1% in September 2017, thereby remaining within the Government target range.

This decline was largely due to lower food prices, particularly for cabbages and Irish potatoes. The decrease in food prices offset the increases in fuel and electricity prices in October.

CBK Governor Dr Patrick Njoroge, who chairs the Committee, non-food-non-fuel (NFNF) inflation remained below 5%, demonstrating that demand pressures are muted. Despite an increase in international oil prices which has exerted upward pressure on fuel prices, improved weather conditions and the extension of the maize subsidy are expected to continue supporting a further lowering in food prices and a decline in overall inflation in the near term, he added.

During the next meeting, it is expected that MPC might give direction on plans to review the interest rate caps law following the negative performance of the banking sector in 2017, which was partly attributed to the law that was effected in September 2016.

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After the last meeting on November 23, Njoroge said the MPC continues to monitor the impact of the interest rate caps on the effective transmission of monetary policy.

The Kenya Bankers Association and individual banks have been pushing for a revision of the law that caps interest rates at 4% above the base lending rate, also known as the Central Bank Rate (CBR). It has stood at 10% since late last year.

“The CBK will continue to closely monitor developments in the global and domestic economy, and stands ready to take additional measures as necessary,” he said.

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