Kenya’s Central Bank has retained its policy rate for the sixth consecutive time, citing increased stability in the forex market, decline in inflationary pressures and drop in lending rates.

The benchmark lending rate to commercial banks— Central Bank Rate (CBR) — has been retained at 11.5 per cent since July 2015.

The bank’s monetary policy committee (MPC) said on Monday that its latest decision is meant to continue anchoring inflation expectations and enhance the credibility of its policy stance that has continued to yield the desired outcome.

“Central Bank will continue to monitor developments and will use the instruments at its disposal to maintain overall price and financial sector stability,” said Dr Patrick Njoroge, the CBK governor and chairman of the committee.

Kenya’s overall month-on-month inflation fell to 6.8 per cent in February 2016 from 7.8 per cent in January, returning to within the Government’s target of 2.5 to 7.5 per cent, largely fuelled by a drop in food and fuel prices.

According to CBK, the foreign exchange market has remained relatively stable supported by a narrowing current account deficit with improved exports, strong diaspora remittances and a lower oil import bill.

Kenya’s forex reserves currently stand at $7.37 billion (equivalent to 4.7 months of import cover) up from $7.02 billion equivalent to 4.5 months of import cover.

This was also boosted by the approval of a new International Monetary Fund (IMF) precautionary facility amounting to $1.5 billion on March 14 to provide additional buffers against short term shocks.

READ: Kenya secures $1.5 billion standby loan from IMF

“The banking sector remains stable and resilient. However, the CBK continues to closely monitor the sector, particularly concerning credit risk as reflected in an increase in non-performing loans (NPLs),” said Dr Njoroge.

According to CBK average commercial banks’ lending rates declined to 17.9 per cent in February 2016, from 18.3 per cent in December 2015.

“The CBK continues to urge banks to reduce their operating costs and enhance transparency in the pricing of credit,” said Njoroge.