Central Bank to Keep Policy Rate Unchanged, Maintain Accommodative Stance

The Central Bank of Kenya (CBK) is expected to leave benchmark interest rate unchanged at 7.00% per cent when it meets Wednesday according to NCBA Market Research.

Central Bank of Kenya Kisumu Branch I Khusoko

The Central Bank of Kenya (CBK)  is expected to leave policy interest rate unchanged at 7.00% per cent when it meets Wednesday according to NCBA Market Research.

The regulator’s Monetary Policy Committee (MPC) will maintain an accommodative stance against a backdrop of stable inflation expectations. In addition to the improving albeit fragile economic growth prospects, NCBA notes in its Weekly Fixed Income Report published Monday.

“While the policy body may hold the CBR at 7.00 per cent, the market will look out for any update on credit markets especially on treatment of potential credit risks from the persistent uncertainty and fragile economic landscape. While the performance of loans has improved, the risk of higher delinquencies has not fully dissipated,” they note.

NCBA believes the current stance remains appropriate and that, the central may have little reason to modify it.

“Moreover, risks to the outlook remain tilted to the downside and may therefore warrant sustained support. Even then, the multiplier on credit markets remains weak and may not be as stimulating as in past years.”

CBK to Publish White Paper on its Monetary Policy Framework in June