MONEY MARKET ANALYSIS
Interbank lending waned further during the week, with average traded volumes dropping by another 41.2% to KES 9.80bn from KES 16.65bn the previous week – in tandem with a 50% fall in the number of transactions. Nonetheless, the average interbank rate dropped marginally to 9.91%, from 9.94%, reflecting concurrent policy interventions by the CBK. The table below summarizes the market liquidity indicators:
May kicked off at a slow pace, with average interbank lending remaining below historical levels. With the heavy bond maturities now behind us, we expect market players to gradually resume horizontal lending — though we remain watchful of how the month unfolds. See the chart below:
Interbank rates remain firmly anchored to the Central Bank Rate, with the highs slightly above the policy rate and the lows closer to the rate but squarely within the corridor. See the chart below;
