CBK retains signal rate amidst rising inflation -Central Bank on Wednesday retained the policy rate at 8.5 per cent amidst rising inflation and the shilling coming under pressure but signalled it will remain active in the open market to mop excess liquidity.With inflation rising for the fifth straight month to 8.36 per cent, against the acceptable upper limit of 7.5 per cent, it was thought the committee could cut money supply by cuing a higher price of money through the Central Bank Rate (CBR).“The MPC (Monetary Policy Committee) therefore decided to retain the CBR at 8.50 per cent given that there were no fundamental structural pressures on inflation, but will pursue a tightening bias in the money market through the CBK monetary policy operations in order to continue to anchor inflationary expectations,” read part of its statement.Analysts said the retention was meant to persuade commercial banks not to increase lending rates to the private sector even after CBK reduces money supply, which will see banks incur higher costs to attract deposits and in the interbank market.
Posted on: Thu, 04 Sep 2014 10:59:30 +0000
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