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Kenya Monetary Policy November 2020

Kenya: Central Bank leaves rate unchanged in November

At its 26 November meeting, the Monetary Policy Committee of Kenya’s Central Bank decided to leave the Central Bank rate unchanged at 7.00%, where it has been since 29 April.

The decision to hold fire largely reflected the Bank’s assessment that the policies implemented so far this year are sufficient to soften the negative impact of the pandemic. Furthermore, the Bank noted that the policies “are being augmented by implementation of the announced fiscal measures in the FY2020/21 Budget”. The decision was also supported by the Bank’s analysis of leading indicators, suggesting that the economy has started to recover during the second half of the year. Moreover, the Bank projected inflation to remain within the 2.5%–7.5% target band in the short term on low prices for food and muted demand.

In terms of future policy, the Bank noted that it “stands ready to take additional measures as necessary”. As such, its tone suggested that a return to monetary policy easing in the near term will closely depend on how the elevated uncertainty surrounding the outlook evolves. However, the Bank should have the space to further cut rates if required.

The next meeting is scheduled to take place in January 2021.

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