n AfricaGrowth Agenda - Money supply, inflation and interest rates : an East African perspective

Volume 2007, Issue 7
  • ISSN : 1811-5187


Many countries in Africa fall under the IMF's Poverty Reduction and Growth Facility (PRGF) or the Policy Support Instrument (PSI). A key component of these programs is quantitative targeting of monetary aggregates. The implication is that one would expect a monetary policy response, and hence interest rate responses, to changes in money supply growth. This article investigates the reaction of interest rates to growth in money supply and changes in inflation in Kenya, Tanzania and Uganda.

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