Analysts see steady Central Bank rate
The Central Bank of Kenya building in Nairobi on June 2, 2014. PHOTO | SALATON NJAU | FILE
What you need to know:
- According to Mr Eric Munywoki, an analyst at Old Mutual, the MPC could maintain the rate at 8.5 per cent to rein in inflationary pressure.
- A decision to lower it could result in macro-economic instability.
Financial analysts on Monday said the Central Bank could hold its key rate at a meeting to be held on Tuesday to keep in check inflationary pressure.
Speaking to Nation, they said the only room that the Monetary Policy Committee (MPC) a rate setting committee of the Central Bank has, is to maintain the policy rate at 8.5 per cent.
A decision to lower it could result in macro-economic instability given the inflationary pressure that rose for the second month in June to 7.39 per cent and recent weakening of the shilling against the US Dollar.
According to Mr Eric Munywoki, an analyst at Old Mutual, the MPC could maintain the rate at 8.5 per cent to rein in inflationary pressure and maintain the stability in the exchange rate.
“The exchange rate is a quite stable right now but there is a bit of pressure on inflation. If the MPC was to lower the rate, there would be more pressure on inflation and foreign exchange which would have far reaching implications on the economy,” Mr Munywoki said on phone.
