The Monetary Policy Committee has retained the Central Bank lending rate at 9% in a meeting held on September 23, 2019.
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.
On top of that, 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.
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.
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.
Considering the above observations and trends, MPC, therefore, decided to retain the CBR at 9.00 percent.