Central Bank of Kenya Holds Interest Rate at 6.25%

The Central Bank of Kenya held its benchmark lending rate unchanged at 6.25%.  The central bank Governor, Njuguna Ndung'u, said: "the tight monetary policy stance would not achieve the desired results at the moment if the supply sides of food, fuel and energy were not effectively being managed to signal relief to the constraints guiding inflationary expectations.  It was noted that the growth of broad money supply has been below its target since September 2010 which rules out demand pull inflation."

Recently the Bank increased, and subsequently decreased the discount window rate by 75 basis points to 6.25%.  The Kenyan central bank last increased the benchmark lending rate by 25 basis points in May this year.  Kenya experienced inflation of 14.49% in June, up from 12.95% in May, compared to 12.05% in April and 9.19% in March, according to inflation data from the Kenya National Bureau of Statistics.  The Central Bank of Kenya has an inflation target of 5 percent.

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