By Helen Nyambura-Mwaura NAIROBI (Reuters) - Kenya's Monetary Policy Committee (MPC) is expected to hold the Central Bank Rate (CBR) at 8.25 percent this week despite rising inflation and a market thirsty for liquidity, market players said. The Central Bank of Kenya's MPC is scheduled to meet on May 21. At its previous meeting in March, it cut the benchmark lending rate by 25 basis points, surprising many analysts who had predicted no change. Although rising inflation could point to a rate rise, increasing the CBR would inflate the cost of borrowing for companies already struggling to cope with the effects of the global crisis, the analysts said. "Moving it either way will really confuse the market," said Saloum Jobarteh, treasury head at Standard Chartered Bank. "Following the economics textbook theory, rates should be going up, but given the state of the economy, my opinion is that rates will stay put because it will be the right thing to do." Kenyans hoped their economy would quickly spring back onto its feet after a post-election crisis at the start of last year hit productivity, but their optimism was crushed by the global economic crisis that followed shortly afterward. Analysts forecast economic growth will to 2.5 percent this year from 7 percent in 2007, according to a Reuters poll., Richard Segal, Africa specialist and head of macroeconomic research at UBA Capital, said he too did not expect any changes. "(The MPC) is focusing on core inflation, which has been relatively well contained in recent months in spite of a modest increase in April," he said. "The imminence of a change in inflation methodology, which is likely to show sharply lower headline inflation, is also good reason for the MPC to pause." Kenya's overall inflation rose to 26.1 percent in April and core inflation increased to 8.2 percent. However, Kenya is changing the way it calculates inflation, a move which analysts expect to slash the headline rate in half. | 
