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CBK holds key lending rate at 8.50 pct

05 March 2014, 10:35

Nairobi -  The Central Bank of Kenya (CBK) held its benchmark lending rate at 8.50 percent for the fifth policy meeting in a row, its Monetary Policy Committee (MPC) said on Tuesday.

East Africa's biggest economy has enjoyed a relatively stable exchange rate since 2012, after it raised lending rates to combat high inflation and market volatility.

An improving economic growth outlook and a lack of significant foreign investor participation in the local bond market has helped Kenya withstand recent volatility seen in other emerging markets.

Inflation, which slowed to 6.86 percent in the year to February from 7.21 percent in January, was within the upper band of the medium target of 5 percent, plus or minus 2.5 percentage points, the central bank said.

"The Committee concluded that the monetary policy measures had continued to deliver the desired price stability," the MPC said in a statement after the policy meeting.

It said credit to the private sector grew by 20.47 percent in January, compared with growth of 20.08 percent in the previous month, in line with the government target, meaning the growth was not feeding inflation.

Kenya's economy is likely to expand 5.8 percent in 2014 after below-target growth of 5.1 percent last year, the Ministry of Finance has forecast.

- Reuters


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