Kenya’s central bank sought to mop up $195.79 million from the market on Tuesday, saying there was excess liquidity. The action, which usually involves the deployment of repurchase agreements and term auction deposits, is a departure from recent weeks, when the bank has been actively offering liquidity to banks using reverse repos.
The bank said the interest rate offered by the mop-up would be determined competitively within a set ceiling. In the mean time, the CBK, which is gearing to review its monetary policy in January, said it has no control over the food and fuel-driven inflation, which is currently at 0.2 percentage points off the upper band of 7.5 per cent.
In November, the Central Bank’s Monetary Policy Committee (MPC) retained its policy rate at 11.5 per cent in a bid to maintain market stability and dampen inflationary expectations.