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Kenya Monetary Policy June 2023

Kenya: Central Bank resumes rate hikes in June

At an unscheduled meeting on 26 June, the Monetary Policy Committee (MPC) of the Central Bank of Kenya decided to increase the Central Bank Rate by 100 basis points to 10.50% from 9.50%. The move came after the Bank decided to hold in May, and was the first rate rise under its new governor Kamau Thugge.

The decision to hike was motivated by an increase in headline inflation in May and the Bank’s expectation of elevated inflation in the near term due to a recent increase in electricity prices and the removal of a fuel subsidy.

In line with its previous statements, the Bank opted against providing explicit forward guidance, emphasizing it would assess the effects of policy actions and changes in the external and domestic economic outlooks. The Consensus among our analysts is for further rate hikes later this year to tame inflation.

The next meeting is scheduled for 9 August.

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