Monetary team to review rate on January 20

Central Bank of Kenya’s rate-setting committee is set to meet on January 20 to decide whether or not to adjust the policy benchmark rate from the current 11.5 per cent.

The Monetary Policy Committee (MPC), which meets at least once every two months, has not altered the rate since July last year when it increased the benchmark rate from 10 per cent to the current 11.5 per cent.

In November last year, the committee maintains the rate for five months running as the shilling appeared to hold at Sh102 to the dollar for several weeks. This was seen as welcome news especially that the shilling had encountered turbulent times touching down to 106 units- the lowest since Sh107 exchange rate witnessed on October 2011.

Central Bank Governor Patrick Njoroge, who also chairs the MPC, said that the November decision was because the committee was satisfied that the monetary policy measures in place were appropriate to maintain market stability and anchor inflation expectations.

But even as the shilling holds at 102, international forces like the appreciation of the dollar against other currencies, especially after US Federal Reserve decided to raise the policy rate, marginally last December, a move that is likely to put some pressure on the local currency.

Since the last meeting in November, inflation has crept up from 7.32 to close the year at 8.01. It is the highest inflation rate since August of 2014.