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:
MARK BOHLUND, SENIOR ECONOMIST SUB-SAHARAN AFRICA, IHS GLOBAL INSIGHT
'The decision was in line with our forecast and market expectations and should thus not have a strong impact on the shilling and financial assets. However, the wording of the press release indicates that another rate cut could still be on the cards.
'The decision appears to be based on the CBK's desire to see the effect of its previous rate cuts and the reduction in political risk following the March elections play out before it decides on whether more monetary stimulus is needed.
'With inflationary pressures highly contained and an acceleration in economic growth far from assured, I still see a fairly high probability that the CBK will cut the Central Bank Rate again in the second half of the year.'
ALEX MUIRURI, FIXED INCOME TRADER, AFRICAN ALLIANCE INVESTMENT BANK
'I think they're (Central Bank of Kenya or CBK) taking a cautious approach toward the recent currency movements and aware that perception this quarter will be influenced by any short term uptick in headline inflation.'
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 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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