These developments have worked, but there are challenges on the inflation front brought about by the external shocks arising from increasing pass through effect of oil prices and sometimes domestic food prices. The monetary policy also facilitated adequate credit expansion to the private sector which grew by 15% on average over the last 3 years.
Short term interest rates remained stable with a gradual upward trend in 2007, and are expected to continue to remain stable in the medium term on account of continued Government commitment to fiscal discipline, inflation expectations anchored on continued low and stable underlying inflation and an independent monetary policy guaranteed by a flexible exchange rate.