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Kenya’s central bank maintains benchmark lending rate amid reports of steady inflation

Published

6 months ago

June 6, 2024

To maintain exchange rate stability, Kenya’s central bank maintained its benchmark lending rate at 13.0% on Wednesday while stating that inflation was stable within its near-term goal range.

After holding its rate steady in April, the bank is holding its rate for the second consecutive time. To help contain persistent inflation and stabilise the currency rate, the bank raised rates in December and February.

“The Monetary Policy Committee (MPC) concluded that the current monetary policy stance will ensure that overall inflation remains stable around the mid-point of the target range in the near term while ensuring continued stability in the exchange rate,” the central bank said in a statement.

The bank aims to assist in guiding short-term market interest rates toward the central bank policy rate, the bank unveiled a new interest rate corridor in August. The rate was fixed at the policy rate plus or minus 250 basis points.

It announced on Wednesday that it has also changed the discount window rate from 400 basis points above the central bank rate to 300 basis points. When commercial banks borrow from the regulator as a last resort, they pay the discount window rate.

After the government successfully raised $1.5 billion from international markets in February to partially buy back another bond that is expiring in June, the value of the Kenyan shilling vs the US dollar has stabilized.

After staying for months on the higher end of the government’s targeted range of 2.5-7.5%, inflation increased a little to 5.1% in May from 5.0% in April.

According to official figures, Kenya’s economy expanded by 5.6% in 2023 compared to 4.9% in the year before.

Despite the consequences of massive flooding earlier in the year, the central bank stated that it anticipates strong economic development in 2024.

“The economy is expected to remain strong in 2024, supported by the resilient services sector, robust performance of the agriculture sector, and continued implementation of government measures to boost economic activity across priority sectors,” it said.

Related Topics:Featured Kenya Lending rate

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IMF mission concludes 4th loan program assessment in Egypt

Published

2 hours ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

2 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.