Kenyan Central Bank Governor Says ‘Age of Volatility’ Is Back

(Bloomberg) -- Volatile times are back on the global economic scene with the U.S. appearing to lack clear policy and growth in Europe slowing, the Kenyan central bank governor said.

Comments by members of the U.S. government have undermined the Federal Reserve’s role as an anchor of monetary policy, Governor Patrick Njoroge said. Other key concerns include the threat of a no-deal Brexit and worsening global trade due to the U.S.-China trade war, he told reporters in the capital, Nairobi, a day after the monetary policy committee maintained its benchmark rate at 9 percent.

“The global economy is without a rudder and hence the negative outlook,” Njoroge said.“It is clear we are back in the age of volatility.”

Key Insights

  • The central bank reduced its estimate of 2018’s economic growth to 6.1 percent from 6.2 percent and forecasts expansion this year at 6.3 percent, supported by the agriculture and services sectors. While Kenyan investor and consumer confidence is “quite strong,” the external sector is worrying and the state should take actions to protect the economy, he said.
  • The $81.3 billion economy is operating at capacity, with most industries operation close to maximum output, Njoroge said. That means that if the central bank is more accommodative, there will be a greater risk of inflationary pressure.

Read: Kenya Holds Rate at 3 1/2-Year Low as Inflation Set to Ease

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