Kenyan c.bank rate seen steady at next MPC meet

By Helen Nyambura-Mwaura

NAIROBI (Reuters) - Kenya's Monetary Policy Committee (MPC) is widely expected to hold the key central bank rate at 7.75 percent at next week's meeting as it watches to see the effect of three previous cuts this year.

All but one of nine analysts surveyed by Reuters said the bank would hold fire on further monetary easing to see if stimulus measures taken to boost the economy are working and to allow for the earlier cuts to seep through.

"Upside risks to inflation remain low and the expansive fiscal programme combined with the above average rains provide some stimulus to constrained economic activity," said Yvette Babb, an economist with Standard Bank.

"An increase is deemed to be counterproductive at this point; the central bank is expected to allow the effect of the previous cut to continue its manifestation in the market."

Kenyans are crossing their fingers that a forecast of above normal rainfall this wet season will resuscitate the economy, which has partly suffered because of consecutive dry seasons.

Agricultural activity has been affected and hydro-electric dams, on which Kenya relies heavily, have almost dried up because of the poor rains.

London-based stock brokerage Exotix had previously expected a 0.25 percent cut before the year-end but has revised its forecast and believes the central bank will keep the rate at 7.75 percent because its near-term concerns about weaker growth have eased.

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