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Kenya Monetary Policy October 2023

Kenya: Central Bank holds rates steady in October, meeting market expectations

At its meeting on 3 October, the Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK) decided to keep the Central Bank Rate unchanged for the second consecutive time at 10.50%, in line with market expectations.

The Bank noted that headline inflation remained within the Bank’s 2.5–7.5% target range in September despite increasing slightly to 6.8%. Additionally, it emphasized that the September increase was mainly driven by a temporary pick-up in food inflation, which is likely to recede during the harvest season in Q4. The Bank also mentioned that the unexpected 100 basis points increase delivered in June is anchoring inflation expectations within the target range despite the hike not yet being fully transmitted to the economy.

In its summary of the decision, the Bank’s tone remained consistent with previous statements; it refrained from explicitly indicating its future policy direction. Nevertheless, it underscored its commitment to evaluating the impacts of policy actions and shifts in the external and domestic economic landscapes. The majority of our panelists anticipate the Central Bank Rate to remain unchanged throughout the year, while a minority expect rate hikes before year-end.

The next meeting is slated for December.

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