Central Bank of Kenya eases monetary policy as inflation stays low

By Jackson Okoth

Nairobi, Kenya: The Central Bank of Kenya has eased its monetary policy stance as inflation falls below 5 per cent.

“Inflation bottomed out in December 2012 and reached 4.05 per cent in May, remaining below the 5 per cent target for eight consecutive months,” said Dr Haron Sirima, Central Bank of Kenya deputy governor.

He was speaking during the ringing of the bell ceremony to commence trading in I&M Holdings Limited shares Tuesday.

Kenya’s international reserves are above $5.8 billion (4.3 months of projected imports), while the exchange rate has stabilised within a narrow range at Sh84.85 to the US dollar, he added.

“These provide reason for a promising 2013. Going forward, monetary policy will continue to aim at a low and stable price environment supportive of economic growth,” said Sirima.

He described I&M Holdings as the first beneficiary of recent amendments to the Banking Act.

The law now allows non-operating holding companies to own more than 25 per cent of the share capital of a bank.

“This amendment was introduced to allow banks reorganise their structures and spread risks associated with subsidiaries and associated companies,” he said.

Raising capital

Listing of the holding company at the Nairobi Securities Exchange is intended to facilitate raising capital for future expansion and create an efficient capital structure.

It will also allow the bank to focus on managing, strengthening and developing its core banking business.

I&M Holdings officially listed its new shares at the NSE after the successful conclusion of a merger deal between I&M Bank and investment company City Trust through a share swap and reverse takeover.

Shareholders of I&M Bank can trade in their shares at the NSE and at the same time unlock the value of shares held by City Trust investors, boosting their shares’ liquidity.