NAIROBI, July 9 (Reuters) - Kenya's central bank held its key benchmark lending rate at 8.5 percent on Tuesday.
Following are analyst and trader reactions:
ALY KHAN SATCHU, INDEPENDENT ANALYST
'The uptick in inflation, the spike in the price of oil which consequentially has weakened the shilling all pointed at an unchanged decision.'
RAZIA KHAN, REGIONAL HEAD OF RESEARCH AFRICA, STANDARD CHARTERED BANK
'Kenya's central bank (CBK) keeps the CBR on hold at 8.5 percent, largely as we expected. Given that we see inflation backing up slightly over the coming months (with a 5-7 percent range), due to a less favourable base; we expect the CBR to remain on hold at 8.5 percent through to the end of the year.
'Interestingly, the CBK sees no immediate underlying pressure, with inflation expected to remain within an 'allowable margin of 2.5 percent'. A note of caution is sounded on oil prices and the potential impact of Middle Eastern instability on Kenyan growth prospects. Nonetheless, with loan applications up a staggering 37 percent in May versus April, domestic momentum is strong.
'Credit growth should emerge as a firm contributor to growth in the coming months. Nonetheless, with the stable KES (Kenya Shilling) helping to offset potential inflationary pressure, we see little need for an imminent change in interest rates, in either direction.'
PETER MUTUKU, HEAD OF TRADING, BANK OF AFRICA
'I think the decision is ok. But personally, I would have wanted to see it cut. But they seem to think everything is okay. I know balance of payments has its pressures, but they should delink balance of payment from economic growth. They need to spur growth more.
'With nothing having been done we expect status quo in the foreign exchange market. But the shilling will remain under pressure. Fundamentally the shilling is still weak.'
(Reporting by Kevin Mwanza; Editing by James Macharia) Keywords: KENYA RATES/
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