Money Market Analysis
In the money market, banks lent to each other at an average rate of 10.9%, representing a 32.61bps decline from the previous week’s average of 11.22%. This decline was primarily driven by the recent downward adjustment of the Central Bank Rate (CBR).
However, trading activity slowed significantly, dropping by 35.8% to KES 14.29 billion from KES 22.25 billion, signaling constrained liquidity. The decline was accompanied by a 20.6% drop in transaction count.
The table below summarizes the market liquidity indicators:
Even after the CBR adjustment , the weighted average interbank rate has remained closely aligned with fluctuations staying well within the interest rate corridor. Now the nterban rate corrdor ranges between 9.25% and 12.25%. This alignment highlights the stability and effectiveness of the monetary policy framework. See the chart below;
