Central Bank of Kenya (CBK) yesterday announced it has retained the policy rate at 8.50 citing effective liquidity management helped ease inflationary pressures.
The Monetary Policy Committee(MPC) meeting held yesterday noted that there has been no fundamental change in the factors driving inflation over the last 12 months.
Sporadic spikes on inflation were however witnessed in the months of July and August 2014.
“This did not have permanent effects as predicted in the previous meeting. This is the case as overall inflation has declined over the last two months and is expected to continue declining in the coming months,” said CBK governor, Njuguna Ndung’u.
Overall month-on-month inflation declined from 6.60 percent in September to 6.43 percent in October 2014 primarily as an outcome of decreases in the prices of most foodstuffs and energy prices.
The shilling remained stable despite short-term pressures from external events like the Eurozone which strengthened the US dollar.
The current forecast the experts said indicates that inflation is moving towards its 5 percent target.
“Given these considerations, the MPC decided to retain its policy stance by maintaining the CBR at 8.50 percent in order to continue anchoring inflationary expectations,” said Ndung’u.
The CBK said it will continue to monitor the key macroeconomic aggregates and any emergent risks from the external and domestic economies that may impact on price stability.
