Central Bank retains  lending rate at 10.0 pct in 12 months

The central bank held its main lending rate at 10.0 percent in order to continue to anchor inflation expectations citing that ‘the current policy stance remains appropriate.’

The Monetary Policy Committee said inflation rose by half a percentage point to 8.0 percent last month, mainly due to shortages of some foods particularly tomatoes, following transport difficulties in the immediate period after the general elections.

“Additionally, unusual demand for some food items such as wheat flour and rice in the period before the elections resulted in a temporary shortage.”

“A normalization of supply, the expected short rains, and supportive measures taken by the Government are expected to further lower food prices in the near term,” the MPC said in a statement.

During that period, growth of credit in the private sector recorded a slight increase to 1.6 per cent over the 12 months to August 2017 from 1.4 per cent in July 2017, reversing the downward trend since August 2015.

“Although the outlook for global growth has improved, uncertainties remain particularly with regard to US economic policies, the post-Brexit resolution and the pace of normalisation of monetary policies in advanced economies,” said the statement from CBK.

MPC changed the CBR in September last year,  from 10.5 per cent to 10 per cent.