|“FOLLOWING A REVIEW OF THE FIRST HALF OF 2018, CYTONN MAINTAINS A POSITIVE OUTLOOK FOR THE MACROECONOMIC ENVIRONMENT IN KENYA, WITH BETTER GDP GROWTH PROSPECTS, SUPPORTED BY IMPROVED WEATHER CONDITIONS AND A CONDUCIVE OPERATING ENVIRONMENT”|
Following a review of H1’2018, we maintain a positive outlook for the macro economic environment in Kenya, with better GDP prospects relative to 2017, supported by improved weather conditions and a conducive operating environment.
The inflation rate increased to 4.3% in June 2018 from 4.1% in May 2018 and the Monetary Policy Committee (MPC) met thrice in H1’2018. In the March 19th meeting, the MPC decided to lower the CBR to 9.5% for the first time since July 2016, noting that there was room for monetary policy easing to further support economic activity as evidenced by (i) inflation, which had eased to 4.5% in February 2018 from 4.8% in January, and (ii) increased private sector optimism as per the MPC private sector market perception survey. They later retained the CBR at 9.5% in the May 28th meeting, citing that the impact of the 50-bps reduction in March had not yet been fully transmitted to the economy, despite there being room for monetary policy easing to further support economic activity.