Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


CBK holds rates against market expectations

06 August 2015, 10:42

Nairobi - Central Bank of Kenya surprised the markets on Wednesday by keeping its benchmark lending rate unchanged at 11.50 percent to allow recent tightening to fully take effect.

The median forecast from a Reuters poll of 11 analysts suggested the central bank would lift interest rates by 50 basis points to 12 percent to support the shilling.

"As a knee-jerk reaction, we expect the Kenyan shilling to weaken on this news, given market expectations of a tightening," said Razia Khan, head of research for Africa at Standard Chartered in London.

Policymakers have raised the rate by a total of 300 basis points since June after the shilling weakened sharply against the dollar mainly due to expectations of a U.S. rate hike, lower export earnings and a surge in imports.

The central bank's Monetary Policy Committee (MPC) said in a statement the measures had "yet to be fully transmitted to the economy".

The shilling was unchanged at 100.75/85 after the decision in after-hours trading, market participants said.

Volatility in the exchange rate at the start of last month has subsided, the MPC said, partly reflecting the impact of the central bank's aggressive mop-up of excess liquidity and its interventions through sale of dollars to banks.

Year-on-year inflation fell unexpectedly last month to 6.62 percent from 7.03 percent in June, offering policymakers further comfort.

Khan of Standard Chartered however said she still expected it to rise above the central bank's preferred band of 2.5-7.5 percent, meaning the tightening cycle might not be over yet.

"This likely pushes out any interest rate tightening to future MPC meetings when the pressure on inflation is more clear, and less clouded by seasonal influences," she said.

For the latest on national news, politics, sport, entertainment and more follow us on Twitter and like our Facebook page.

- Reuters


Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Submitted by
Cyril Mike Odhiz
Kenyans furious on young lady aft...

A young Kenyan woman is the talk of town after she posted a photo with her elderly lover after a round of steamy sex, or so the photo suggested.  Read more...

Submitted by
Kiplangat langat
Uhuru could be a one term Presid...

Bomet governor Isaac Ruto has said that President Uhuru Kenyatta could be a one term President if he fails to increase allocations to the counties. Read more...

Submitted by
Mody Sammy
35 year old farmer a new milliona...

A 35 year old farmer from Mpeketoni Lamu county has become the latest millionaire in town as she became winner in the ongoing ‘Shinda Mamili na Story Ibambe’. Read more...

Submitted by
Shakila Alivitsa
Leave your past relationship bagg...

Leave your past relationship baggage at the door when you start a new relationship. Read more...

Submitted by
Shakila Alivitsa
Advice from a young married Kenya...

I was just going to get water in the office kitchen and thought a simple hi was fine until I ended up in an hour long conversation with someone. Read more...

Submitted by
Shakila Alivitsa
Helping you find the type of man ...

To put it simply, you can’t go looking for fish in a meat market; you have to go to a fish market. Read more...