CBK team cites falling inflation in retaining base rate
The Monetary Policy Committee retained Central Bank Rate at 8.5 per cent after meeting on Tuesday. PHOTO/FILE
What you need to know:
- The committee noted that the overall inflation had continued to decline from 7.21 per cent in January to 6.86 per cent in February and remained within the target range of 5 per cent or below.
- It said the exchange rate stability was sustained during the period with the shilling to US dollar rate fluctuating within a narrower range of Sh86.06 and Sh86.58 in February.
The Monetary Policy Committee retained Central Bank Rate at 8.5 per cent after meeting on Tuesday.
The committee noted that the overall inflation had continued to decline from 7.21 per cent in January to 6.86 per cent in February and remained within the target range of 5 per cent or below.
“This is an indication that the monetary policy stance has continued to support a stable inflation rate and that private sector credit growth during the period was non-inflationary,” the statement signed by central bank governor, Prof Njuguna Ndung’u said.
It said the exchange rate stability was sustained during the period with the shilling to US dollar rate fluctuating within a narrower range of Sh86.06 and Sh86.58 in February.
Exchange reserves rose from $6,165 million (equivalent to 4.32 months of import cover) at the end of December to $6,258 million (equivalent to 4.38 months of import cover) at the end of February.
They said the government domestic borrowing programme had ensured that the private sector is not crowded out, and the bond market remained vibrant while also facilitating the deepening of the capital market.
The committee also noted that the latest stress tests and data revealed that the banking sector remained solvent and resilient with the number of loan applications increasing from 94,259 in December to 111,486 in January distributed across the key sectors of the economy.
