Kenya revives interest rate corridor

Controversial 2016 law capping rates undermined earlier attempt at corridor

kenya-banknote-shilling

The Central Bank of Kenya (CBK) has reinstituted an interest rate corridor as part of a “modernisation” of monetary policy.

In a statement published on August 9, the monetary policy committee announced it is bringing in “an interest rate corridor around the central bank rate (CBR) set at ± 250 basis points”. Policy-makers said they would seek to align the policy rate – the CBR – and the interbank lending rate.

The CBK also announced a 200bp cut in the discount window interest rate, to 4% above

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