The CBK also outlined measures to restore proper use of the Discount Window e.g. no access for banks that lend in the interbank market, and restrictions on borrowing to a maximum of statutory cash reserves. Previously Kenya's central bank increased the CBK discount window rate by 125bps to 8.00% at the end of June. Kenya experienced inflation of 14.49% in June, up from 12.95% in May, compared to 12.05% in April and 9.19% in March, according to inflation data from the Kenya National Bureau of Statistics. The Central Bank of Kenya has an inflation target of 5 percent.
Tuesday, July 12, 2011
Central Bank of Kenya Reverses Discount Window Rate to 6.25%
The Central Bank of Kenya (CBK) reversed its 29 June 2011 decision, lowering CBK discount window rate to 6.25% from 8.00%. The CBK maintained the central bank rate unchanged at 6.25% (having increased it 25bps on the 31st of May this year). The Bank said in its circular: "Central banks always run discount windows as facilities of last resort as a means of providing temporary liquidity to banks in extreme cases. The CBK is concerned that recently, commercial banks have not been using the Discount Window as a last resort, but as a permanent supply if liquidity."
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