Kenyan Central Bank Has `Room to Adjust’ Tight Monetary Policy

NAIROBI, Kenya, Capital Markets in Africa: Kenya’s central bank has room to adjust interest rates in East Africa’s biggest economy as inflation falls back within the government’s target range, Governor Patrick Njoroge said.

“One can say comfortably that there is room to adjust from the tight monetary stance that was there,” Njoroge said in an interview Thursday at the World Economic Forum on Africa in the Rwandan capital, Kigali. “I think that it is a decision that the Monetary Policy Committee needs to make. I cannot pretend to speak on its behalf.”

The central bank raised its benchmark interest rate twice last year by 300 basis points to 11.5 percent, which has helped to curb inflationary pressure. The monetary policy committee is next scheduled to meet on May 23. 

Kenyan annual inflation was 5.3 percent in April, right in the middle of the government’s target range of 2.5 percent and 7.5 percent.

“Expectations are now fully anchored, so the population does not expect inflation will be rising in the future,” he said.