Rate limit saps bank efforts

KENYA’S decision to limit the rate that commercial banks could charge for loans would cloud the central bank’s monetary policy signals and might undermine efforts to keep inflation within the government’s target range, the International Monetary Fund (IMF) said. While the central bank had been more effective in containing inflation over the past three years, “controls being introduced are going to blur the signals” that emanate from its interest rate decisions, Armando Morales, the IMF representative for Kenya, said. “The central bank will need to go back to revise the arsenal of its instruments to see how they can offset this blurring of signals in the market,” he said. President Uhuru Kenyatta last week approved a law that placed a ceiling on the amount of interest lenders could charge for debt. – Bloomberg