, NAIROBI, Kenya, Feb 26 – All eyes are on Thursday’s Monetary Policy Committee (MPC) meeting with expectations of a hike in the Central Bank Rate (CBR) that has been maintained at 8.5 percent.
Commercial Bank of Africa (CBA) Treasury Dealer Joshua Anene says cautious trading continues to be driving the market with players waiting on the sidelines ahead of the MPC meeting.
Speaking to Capital FM Business, Anene says the market expects the MPC to increase the CBR rate given the recent fears that rapid credit expansion might be harmful to the economy.
“We have seen the International Monetary Fund and international rating agency Moody warn that the growing credit expansion will hurt the economy, “Anene said.
The meeting comes a week earlier than expected owing to the exit of the Central Bank of Kenya (CBK) Governor Njuguna Ndung’u whose tenure ends on March 4, 2015.
The CBK has maintained the CBR at 8.50 percent to anchor inflation expectations and ensure that inflation continues to decline toward the government’s 5.0 percent target.
The IMF recommended that the CBK should remain vigilant and act as needed to head off any pressure from rapid credit growth and the envisaged scaling up of infrastructure spending potentially by raising interest rates.
Meanwhile, the government has initiated the process of replacing Ndung’u.
Treasury Cabinet Secretary Henry Rotich says: “We have initiated the process and more details will be given soon.”
During his tenure, the Governor was named the Central Bank Governor of the year by Emerging Markets (EM) Magazine.
The award is given by EM each year, in recognition of the achievements of leading policy makers in emerging markets.
The award particularly recognises the governor’s role in spearheading monetary policy measures which have been credible in fighting inflation and maintaining price stability during an era of global economic turbulence, championing financial inclusion initiatives and banking sector innovations.
In the citation, EM said: “This award signals the confidence you have inspired in your key stakeholders and reflects their faith in central bank policy under your leadership.”