The monetary policy committee said the drop in inflation from 6.09 per cent in August, to 5.32 per cent in September and further to4.14 per cent in October, together with stability in exchange rates and high level of foreign exchange reserves provided space for gradual easing of monetary policy stance.
Exchange rates ranged between 84.91 to the US dollar in September to 85.28 in October while reserves rose to Sh448 billion ($5247.9m) or 4.14 months of import cover.
“Given the considerations above the committee decided to reduce the central bank rate by 200 basis points to 11 per cent,” central bank said.
However volatile fuel prices,a large current account deficit and spillover effects of the global economic slowdown portends risks, the central bank said.
