NAIROBI: Kenya’s central bank cut its key rate by 100 basis points to 10.5 percent, the first reduction in three years, as the rate of inflation decelerates to within the government’s target corridor.
Only two of nine economists and analysts polled by Bloomberg had expected the decision. Central bank Governor Patrick Njoroge said earlier this month falling consumer prices, which are now within the government’s 2.5 percent to 7.5 percent target range, gave it space to “adjust from the tight monetary stance that was there.” The rate was lowered from 11.5 percent, according to Monetary Policy Committee statement e-mailed Monday from the capital, Nairobi.
“The committee noted that overall inflation is expected to decline and remain within the government target range in the short-term,” Njoroge said in the statement. “Therefore, it concluded that there was policy space for an easing of monetary policy while continuing to anchor inflation expectations.”
The central bank raised its benchmark interest rate twice last year by a total of 300 basis points to 11.5 percent, which helped curb inflation to 5.3 percent in April from a peak of 8 percent at the end of 2015.
