Kenyan central bank to ease investors’ vote concerns

Bloomberg

Kenya’s central bank is communicating a sense of normalcy and continuity to investors amid uncertainty about
the country’s protracted elections,
Governor Patrick Njoroge said.
Institutions including the nation’s courts show Kenya is a ‘mature’ democracy, Njoroge said. While liquidity in the country’s money markets is tight at the moment, it has “nothing to do with the political circumstances,” he said.
Kenya’s Supreme Court last month overturned President Uhuru Kenyatta’s win in an August 8 election, after finding the vote wasn’t conducted in line with the constitution.
Despite the drought, ‘food-driven inflation will not have knock-on effects on other things if we can manage the monetary policy correctly,’ Njoroge said. “We are not worried about that and at this moment inflation is well-anchored.”
Inflation slowed to 7.1 percent last month and the central bank has kept its key rate at 10 percent since
September 2016.
Kenyatta introduced a law limiting interest charges on loans to 400 basis points above the Central Bank of Kenya rate last year. Monetary policy has been complicated by the caps, Njoroge said.
“There is some concern about the direction of policy in order to produce stimulus,” he said.
Njoroge said the central bank may lower its 2017 economic growth forecast slightly to reflect uncertainty about the elections. The rate could be “south of 5.5 percent, but definitely above 5 percent,” the former IMF adviser said in an interview in Washington on Saturday.