Kenya Monetary Policy Unchanged in March

Kenyan Monetary Policy Committee decided to hold the central bank rate at 8.50 percent on March 4th, as overall inflation continued to decline in February and remained within the target range, while exchange rate stability was maintained.
Central Bank of Kenya | Isabel Felino | 3/4/2014 4:41:13 PM
Excerpt from the statement by the Central Bank of Kenya:

The overall month-on-month inflation declined from 7.21 percent in January to 6.86 percent in February. Month-on-month non-food-non-fuel (NFNF) inflation remained relatively stable: it increased slightly from 4.83 percent to 4.93 percent during the period. 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.

Exchange rate stability was sustained during the period. The Kenya Shilling to US Dollar rate fluctuated within a narrower range in February compared to the previous month. The Central Bank increased its level of usable foreign exchange reserves in the period, mainly attributed to commercial banks selling of foreign exchange.

The Government domestic borrowing program for the Fiscal Year 2013/14 as provided in the Medium-Term Budget Policy Statement, remains consistent with the monetary policy objectives, ensuring the expected increase in private investment and enabling the bond market to remain vibrant while also facilitating the deepening of the capital market.

Confidence in the economy remains strong. Specifically, the latest Sovereign rating by Fitch Rating agency undertaken in February placed Kenya at "B+ with a stable outlook" and improved its position on Nairobi Securities Exchange (NSE) index. Diaspora remittances remained resilient. This was further supported by the MPC Market Perception Survey which showed that the private sector expects inflation and the exchange rate to remain stable for the remainder of 2014. Furthermore, the private sector firms sustained their optimism for a strong growth in 2014.

Kenya Monetary Policy Unchanged in March