This archive report was first published on 26 July 2021.
On July 28, 2021, the Central Bank of Kenya's Monetary Policy Committee (MPC) is set to make its 9th consecutive decision to keep the Central Bank Rate (CBR) steady at 7%.
This view is based on inflation expectations that remain anchored, as stated in Genghis Capital's weekly bulletin. However, there is an upward bias due to the base effect of the current quarter.
The COVID-19 pandemic continues to pose uncertainty, with a cumulative total of 197,000 cases reported as of July 25, 2021.
According to Genghis Capital, policy makers will likely pencil in sluggish growth due to the COVID-19 fallout, as stated in their Research Note.
The World Bank and International Monetary Fund have slashed Kenya's 2021 growth projections, citing the country's economic recovery as dependent on the speed of its COVID-19 vaccination program.
Researchers at Genghis Capital noted that activity in the Secondary Bond Market declined by 27.6% last week, with most trades executed on the infrastructure bond segment and the short-to-medium end of the yield curve.
T-Bills subscriptions at the weekly auctions hit a performance rate of 69.6%, the lowest in 12 weeks, with the 91-day and 182-day T-Bill tenors interest rates below the benchmark policy rate.
The average interbank rate fell 80 basis points to 3.28%, and the CBK mopped up an aggregate KSh 79.05 billion in excess liquidity via Term Auction Deposits.
As the CBK Monetary Policy Committee meeting approaches, market attention is focused on inflation figures to be released on July 30, 2021, and the results of the Weekly Treasury Bills Auction.
