Kenya’s central bank will probably leave its key lending rate unchanged for a fifth consecutive meeting as it balances the need of spurring economic growth with bringing inflation closer to the mid-point target.
The Monetary Policy Committee, led by Governor Njuguna Ndung’u, will maintain the policy rate at 8.5 percent, according to all four analysts surveyed by Bloomberg. The bank will announce its decision tomorrow afternoon by e-mail.
“The shilling had been fairly stable against the dollar and inflation is within target,” Mathangani Kariuki, a fixed-income trader at Nairobi-based African Alliance Investment Bank Ltd., said by phone. “The central bank will go for maintaining that stability.”
Kenyan policy makers in July ended a rate-cutting cycle that lowered borrowing costs by 9.5 percentage points over an almost yearlong period. The economy grew at a slower pace than initially forecast by the government in 2013, expanding 5.1 percent against a goal of 5.5 percent to 6 percent. Expansion is projected at 5.8 percent this year.
The inflation rate fell to 6.9 percent in February, according to the statistics agency. The government’s target for inflation is 5 percent, plus or minus 2.5 percentage points.
The meeting comes as Kenya’s Ethics and Anti-Corruption Commission and the public prosecutor try to charge Ndung’u in a case related to the award of a tender for security software at the bank. The High Court on Feb. 14 blocked the governor’s arrest until March 12 when Ndung’u’s petition seeking to stop the charges will be heard. Ndung’u denies the accusations.
The government will want to ensure stability is maintained in the financial markets before offering the country’s first Eurobond to raise as much as $2 billion, Kariuki said. The overseas debt sale has been repeatedly delayed since September.
“We are still waiting for the Eurobond,” Kariuki said. “I don’t see the central bank taking any action that signals a turn in the market.”
The currency has gained less than 0.1 percent this year, closing at 86.25 per dollar on Feb. 28. Monetary policy makers in neighboring Uganda will tomorrow also review that country’s key lending rate, which stands at 11.5 percent.