The Central Bank (CBK) lending rate of 9% has been retained as announced in a meeting held on September 23, 2019 by the Monetary Policy Committee ((MPC).
MPC reported that month-on-month overall inflation remained within the target in July and August 2019 as it fell to 5 percent in August from 6.3 percent in July. Also, the foreign exchange market remained relatively stable, supported by narrowing of the current account deficit to 4.2 percent of GDP in the 12 months to July 2019 from 5.5 percent in July 2018.
Furthermore, the committee noted sustained optimism that economic growth will remain strong in 2019 due to the implementation of the Big 4 agenda projects, improved weather conditions, and a stable macroeconomic environment.
On top of that, there has been strong growth in the leading indicators of economic growth such as electricity, cement consumption, tourist arrivals, consumption-based taxes, and imports of intermediate goods.
Moreover, global economic slowdown largely due to uncertainties with escalating trade tensions between China and USA couple with shifting expectations on the nature and timing of Brexit has led to increased volatility in the global financial markets.
The narrowing reflects strong diaspora remittances, resilient exports for horticulture and manufactured goods, higher receipts from tourism, lower imports of food and SGR related equipment. Considering the above observations and trends, MPC, therefore, decided to retain the CBR at 9.00 percent.
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