, NAIROBI, Kenya, Nov 5 – The Central Bank of Kenya (CBK) has again retained its lending rate at 8.5 percent following what it termed as lack of inflationary pressures despite introduction of the Value Added Tax (VAT) law.
The CBK’s Monetary Policy Committee said the overall month-on-month inflation declined from 8.29 percent in September to 7.76 percent in October 2013.
The decline largely reflected a fall in the prices of all energy items as well as some food items and the stable exchange rate that also contributed to the relative prices declining.
The committee says the strong exchange rate during the period was supported by foreign exchange inflows and liquidity management by the bank.
“Exchange rate fluctuated within a range of Sh84.72 and Sh86.79 against the dollar in October 2013 compared to a range of Sh86.65 and Sh87.58 in September 2013,” the committee pointed out.
The banking sector on the other hand, remained solvent and resilient.
“The 2013 Financial Access Survey shows that access to financial services in Kenya has increased and now stands amongst the highest in Africa. This will enhance the transmission of monetary policy to the real sector,” the committee said.
The private sector credit grew by 17.36 percent in September compared to 16.17 percent in August 2013.
The committee noted that confidence in the economy has been sustained with activity at the Nairobi Securities Exchange (NSE) remaining buoyant with rising foreign investor participation.