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XINHUA NEWS SERVICE REPORTS FROM THE AFRICAN CONTINENT

 

Kenya’s apex bank lowers benchmark rate to nine percent   

NAIROBI (Xinhua) -- Kenya’s apex bank on Monday lowered its benchmark rate from 9.5 percent to 9 percent as economic output was below its potential level while there was some room for further accommodative monetary policy.

Patrick Njoroge, Central Bank of Kenya Governor and Chairman of the Monetary Policy Committee (MPC), the apex bank’s top monetary policy organ, said inflation expectations were well anchored within the target range, and that economic growth prospects were improving.

“Consequently, while noting the risk of perverse outcomes, the committee decided to lower the Central Bank Rate (CBR) to 9.00 percent from 9.50 percent,” Njoroge said.

He noted that the MPC will closely monitor the impact of this change in its policy stance.

“Other developments in the domestic and global economy will also be observed, and the MPC stands ready to take additional measures as necessary,” he noted.

The MPC met on Monday to review the outcome of its previous policy decisions and recent economic developments against a backdrop of sustained improvement in economic fundamentals: a strong pickup in economic activity; increased optimism on the economic growth prospects; favorable weather conditions; and continued strengthening of the global economy.

Njoroge added that month-on-month overall inflation remained within the target range in May and June, largely due to lower food prices while non-food-non-fuel (NFNF) inflation remained below 5 percent, indicating that demand-driven inflationary pressures are muted.

The governor said the foreign exchange market remains stable supported by balanced inflows and outflows, and a continued narrowing in the current account deficit. 

Njoroge noted that the current account deficit narrowed to 5.8 percent of gross domestic product (GDP) in the 12 months to June from 6.3 percent in March.

“It is expected to narrow further to 5.4 percent of GDP in 2018, with strong growth of agricultural exports particularly tea and horticulture, resilient diaspora remittances, and improved tourism receipts,” he said.

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