Excerpts from the statement by the Central Bank of Kenya:
The Committee noted that overall inflation had declined in both September and October 2014 to be within the prescribed range of the medium-term target of 5 percent after some sporadic effects in the previous months.
The exchange rate remains stable despite short-term pressures arising from external events in the Eurozone and the United Kingdom that has resulted in a “flight to safety” and the strengthening of the US Dollar. Resilient foreign exchange inflows through diaspora remittances and sustained foreign investor participation in the Nairobi Securities Exchange (NSE) continued to support the Kenya Shilling.
The Committee noted that there has been no fundamental change in the factors driving inflation over the last 12 months, and concluded that the current monetary policy stance coupled with effective liquidity management operations had moderated inflationary pressure. However, there were notable sporadic spikes on inflation that were witnessed in the months of July and August 2014, although they did not have permanent effects as predicted in the previous meeting. The current forecast indicates that inflation is moving towards its 5 percent target. Given these considerations, the MPC decided to retain its policy stance by maintaining the CBR at 8.50 percent in order to continue anchoring inflationary expectations.