NAIROBI (Reuters) - Kenya's central bank left its benchmark interest rate unchanged at 18 percent for a sixth month in a row on Tuesday, saying potential risks to inflation and the stability of the shilling remained.
Eight out of 10 analysts polled by Reuters had expected the bank's Monetary Policy Committee (MPC) to leave its Central Bank Rate on hold, while two called for a cut.
The central bank said there was still excess liquidity in the market, which also posed a risk to demand driven inflation pressure and exchange rate stability.
"Given the above considerations, the Committee observed that there is need to expand the monetary policy instruments in use to address both the inflationary pressures and exchange rate dynamics," the MPC said in statement.
"These instruments should help bring inflation towards the government short-term target of 9 percent, restore exchange rate stability, and address the threat posed by the excess liquidity in the market," it said.
"The Committee therefore decided to retain the Central Bank Rate at 18.0 percent while introducing longer tenor Term Auction Deposits as an additional instrument for liquidity management."
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