The skyline in Kenya

Kenya Monetary Policy January 2018

Kenya: Central Bank keeps key rate on hold in January

The Central Bank opted to keep the keep the key rate unchanged at 10.00% at its first meeting of 2018 held on 22 January. The decision was in line with market expectations.

Inflation continued falling at the close of 2017, dropping from 4.7% in November to 4.5% in December, but remaining around the midpoint of the Bank’s 2.5%–7.5% target range. December’s reading marked the lowest in over four years. Driving the downward trend have been lower food prices, supported by improving weather conditions following a long drought, which boosted agricultural output. While fuel and electricity prices increased during the festive period in December, they were more than offset by the decline in food prices.

Core inflation again came in below 5.0% in December, signaling that demand pressures remained muted. Although the downward trend in inflation opened room for monetary accommodation to stimulate higher economic activity, upward price pressures stemming from the ascent in oil prices may deter the trend. Nevertheless, inflation is expected to remain well anchored and within the target-band in the near term.

Lacking substantial forward guidance, the Bank signaled in its statement the possibility of a future rate cut, pointing out that there is scope for a more accommodative monetary policy in the near-term amid falling inflation. However, further monitoring and assessment of policy decisions, including the impact of the cap on commercial banks’ lending rates, along with developments in the global economy, are needed to determine whether to change stance. The date of the next monetary policy meeting has yet to be disclosed.

Kenya Interest Rate Forecast

Free sample report

Access essential information in the shortest time possible. FocusEconomics provide hundreds of consensus forecast reports from the most reputable economic research authorities in the world.
Close Left Media Arrows Left Media Circles Right Media Arrows Right Media Circles Arrow Quote Wave Address Email Telephone Man in front of screen with line chart Document with bar chart and magnifying glass Application window with bar chart Target with arrow Line Chart Stopwatch Globe with arrows Document with bar chart in front of screen Bar chart with magnifying glass and dollar sign Lightbulb Document with bookmark Laptop with download icon Calendar Icon Nav Menu Arrow Arrow Right Long Icon Arrow Right Icon Chevron Right Icon Chevron Left Icon Briefcase Icon Linkedin In Icon Full Linkedin Icon Filter Facebook Linkedin Twitter Pinterest