Yesterday (Wednesday October 12, 2011), East African Community Central Bank Governors met and deliberated over the current economic developments in the region.

Prof. Njuguna Ndung’u (Governor, Central Bank of Kenya), Prof. Benno Ndulu (Governor, Bank of Tanzania), Prof. E. Tumusiime Mutebile (Governor, Bank of Uganda) and Amb. Claver Gatete (Governor, National Bank of Rwanda) met in Nairobi to deliberate on the current economic developments regarding inflation and exchange rate in the region.

During their deliberations, the Governors were in consultation with Mr. Gaspard Sindayigaya (Governor, Banque de la Republique du Burundi).

Governors observed that the region is facing very high inflation originating primarily from high food and fuel prices but also from demand pressures. The Governors also observed that the region is facing pressures on the currencies to weaken and exchange rate volatility. The pressures for the currencies to weaken result mainly from the widening of the current account deficit originating from rapid expansion of the oil import bill and imports for infrastructure development. In addition, the exchange rate volatility has been due to the effects of the Euro sovereign debt crisis and currency speculation activities.

In a press statement, issued after the meeting, the Governors stated that given these challenges, the Governors agreed to coordinate the following actions:

• Tightening monetary policy,
• Stemming volatility in the foreign exchange markets, and
• Curbing currency speculation activities.