Kenya reviews central bank rate upwards
This move is intended to manage liquidity and inflationary pressures in the market.
The new rates would be applicable for eight weeks “unless unforeseen developments emerge”, acting Central Bank of Kenya governor Jacinta Mwatela said while making the announcement on Wednesday.
The review was done on advice of the Monetary Policy Advisory Committee.
The last review was in early June when the CBR was raised from 7 percent in line with the Treasury Bill rate. Mwatela said the current liquidity, which stands at Sh103 billion, was putting pressure on inflation rate and would jeopardise the government’s objective of achieving microeconomic stability.
“The committee observed that monetary expansion was in excess of the monetary targets and this expansion was putting pressure on prices,” she said.
Currently, the inflation rate stands at 10,1 percent. Mwatela said commercial banks would not be expected to increase their lending rates as they had enough liquidity and did not need to borrow from the central bank.
“Any reasonable commercial bank should not think of raising the rates because there is excess liquidity,” she said. ‘ The East African Standard.