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Central bank raises benchmark lending rate to 10 pct

BUSINESS
By Reuters | June 9th 2015

Kenya's central bank raised its benchmark lending rate by a higher-than-expected 150 basis points to 10 percent on Tuesday, saying the action was needed to curb demand pressure on the shilling.

The shilling firmed to 97.15/25 per dollar after the decision from 97.30/50 where it was trading earlier after the first rate change in two years, when rates were lowered.

The increase follows a slump in the local currency to fresh 3-1/2 year lows that prompted the Monetary Policy Committee to bring its rate meeting forward by a month.

"The persistent volatility in the global foreign exchange markets coupled with the projected recovery in international oil prices have implications on inflationary expectations," the bank's Monetary Policy Committee (MPC) said in a statement.

The central bank had been expected to raise rates. A Reuters poll of analysts showed most expect rates to be hiked by 100 basis points.

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