Monetary Policy
MPC Press Release - July 2008
Thursday, 31 July 2008 00:00

Domestically, there have been quite rapid price increases and some volatility on the foreign exchange market. The latest survey suggest that uncertainty about developments in crude oil prices, the rise in inflation, and a surge in food prices have further softened business and consumer confidence in the short run, but optimism remains high about general economic prospects.

On the economy, latest information continue to show sustained pace in economic activity. The Bank’s Composite Index of Economic Activity (CIEA) continued to show a strong growth into the second quarter of 2008. The index at the end of May 2008 rose by 4.4 percent over the level recorded for the first quarter, and 22.9 percent in year-on-year terms, which was above the trend growth rate of 21.3 percent. This compares with 21.5 percent recorded in the same period of 2007. Increases in the overall index were broad based and reflected in all the major sub-components.

Evidence from other real sector indicators also point to sustained momentum in economic activity. Cement production for the first five months of the year (January to May 2008) amounted to 1,044,859 metric tons, a growth of 20.5 percent over the level of 867,165 metric tons for the same period in 2007. Similarly, benchmark retail sales recorded a growth of 35.9 percent compared with sales for the same period in 2007: And a total of 47,271 motor vehicles were registered within the first five months to May 2008, compared with 36,040 for the same period in 2007 (a growth of 31.2 percent). Labour market statistics showed relatively strong demand for labour during the first half of the year. Cumulatively for the period January to June 2008, a total of 5,788 jobs were advertised, compared with 3,541 for the same period in 2007.

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