Kenyan central bank Governor Patrick Njoroge said monetary policy tightening has helped to bring inflation expectations in East Africa’s biggest economy under control.
“We have brought down inflationary expectations,” Njoroge told lawmakers on Thursday in the capital, Nairobi. “Inflation is back in control.”
The central bank increased its benchmark interest rate by 3 percentage points in June and July to help ward off risks stemming from an 8.7 percent slump in the currency in the first half of the year. The comments may add to speculation the bank will keep the key rate unchanged at 11.5 percent on Nov. 17.
Inflation eased to 6.7 percent in October from a high this year of 7.1 percent in April. The government’s medium-term target is 2.5 percent to 7.5 percent.
Njoroge said he expects Treasury bill rates to fall as quickly as they rose. Yields on the 91-day securities dropped to 13.8 percent at last week’s auction from a record 22.5 percent on Oct. 22.
“I am confident that we will execute a soft landing of interest rates,” Njoroge said. “The set of interest rates that are still up there are the commercial banks.”
The shilling fell 0.1 percent to 102.35 against the dollar as of 6:55 p.m. in Nairobi, taking its decline this year to 11 percent.