NAIROBI, Sept. 10 (Xinhua) -- Kenya's central bank (CBK) has ruled out intervening to stem the rising inflation which it says was sparked by the post-election crisis which gripped in the country early this year.
CBK Governor Njuguna Ndung'u said inflation outlook is optimistic and is expected to be below 20 percent in January and to continue falling as the New Year progresses.
Ndung'u said the economic growth in 2008 will be affected by stagnation and slowdown as a consequence of post-election violence.
"As food prices continue to fall as supply chains are restored and effects of post-election violence becomes part of history, inflation is expected to continue the downward trend," he said in a statement.
"The current inflation trends were sparked and are still propelled by supply shocks that will dissipate in time as long as the money supply growth is kept in check and that is the policy CBK has pursued."
The violence left many farmers displaced in Rift Valley Province, which is considered the grain basket of the country.
There have been calls for the Central Bank to intervene to stem spiraling inflation that rose to 27.7 percent in August from 26.6 percent in July.
"The post election violence also disrupted the input supply chains by affecting mostly fertilizer supplies thus lowering production. This coupled by bad weather in late 2007 pushed up prices earlier in the year," the CBK Governor said.
Ndung'u forecast a revised growth of between 4.5 and 6.0 percent, following 7.0 percent last year. The International Monetary Fund predicted earlier this year that the East Africa's biggest economy would grow by about 4.0 percent.
"Kenya's macroeconomic stability and the resilience of the economy is beyond doubt. These indicators strongly point to a conclusion that economic recovery is promising," he said.
