By Ronald Owili
NAIROBI, The Central Bank of Kenya (CBK) has retained its benchmark lending rate at 11.5 per cent for the fifth consecutive time noting that it will use instruments at its disposal to maintain overall price and financial sector stability.
The CBK also kept the Kenya Banks’ Reference Rate at its current level of 9.87 per cent. CBK Governor Dr. Patrick Njoroge said here Thursday that the decision would help to anchor inflation expectations.
The shilling weakened 16 per cent within the first five months of last year, prompting the central bank to revise upwards the benchmark lending rate by 150 basis points in June and July and this helped to prop up the shilling which had hit a three-and-a-half-year low to stabilize at the 102/103 level against the US dollar.
The central bank’s rate-setting Monetary Policy Committee (MPC) had in its previous four meetings retained the benchmark lending rate at 11.5 per cent
In a statement afterthe latest MPC meeting here, Dr. Njoroge said: “The Committee concluded that the current inflation pressures are temporary, and that the monetary policy measures currently in place are containing any demand pressures in the economy.”
The rate of inflation that is currently at 8.01 per cent has broken the government’s upper range target of 7.5 per cent. However, the CBK says inflationary pressures would have eased by April this year.
The Central Bank says it will use the instruments at its disposal to maintain overall price stability.
In addition, CBK has retained the Kenya Banks’ Reference Rate at 9.87 per cent, noting that this will help ensure market stability.
The Kenya Banks’ Reference Rate was introduced two years to help banks price their loans while enabling borrowers to compare interest rates charged by different banks.