Kenya Moves To Lower Inflation

Kenya’s central bank will focus on lowering inflation and
maintaining exchange rate stability to spur growth in east Africa’s biggest
economy, Governor Njuguna Ndung’u said in the bank’s September newsletter.

The bank said in the newsletter it will aim to keep
inflation expectations within the government’s five per cent medium-term target
and keep the shilling stable to help foster growth.

“Looking ahead, monetary policy will focus on anchoring
inflation expectations to low levels within the target and sustaining the
stability of the exchange rate,” Ndung’u said.

“This would provide a stable macroeconomic environment
necessary to support a stronger economic growth base and a planning horizon by
private sector for higher investments.”

The bank early this month cut its key lending rate by a
record 350 basis points to 13 per cent, largely in line with market expectations
and against a background of reducing inflationary pressures and exchange rate
stability.

Kenya’s year-on-year inflation fell for the ninth straight
month in August, and faster than expected, to 6.09 per cent.

Projected good rains and a stable supply of food is expected
to further ease the country’s inflation.

Ndung’u said the bank will also strive to maintain adequate
stocks of foreign exchange reserves that provide a buffer for shocks and
confidence in the market.