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Kenya Interest Rate

Kenya Interest Rate

Central Bank Rate in Kenya

The Central Bank Rate ended 2022 at 8.75%, up from the 7.00% end-2021 value and in line with the reading of 8.50% a decade earlier. For reference, the average Central Bank Rate in Sub-Saharan Africa was 11.80% at end-2022. For more interest rate information, visit our dedicated page.

Kenya Interest Rate Chart

Note: This chart displays Policy Interest Rate (%) for Kenya from 2018 to 2017.
Source: Central Bank of Kenya.

Kenya Interest Rate Data

2018 2019 2020 2021 2022
Central Bank Rate (%, eop) 9.00 8.50 7.00 7.00 8.75

Central Bank holds policy rate at over one-decade-high level in April

At its meeting on 3 April, the Monetary Policy Committee of the Central Bank of Kenya (CBK) kept the key policy rate unchanged at 13.00%. As a result, the policy rate remained at its highest level in over a decade. The hold, which came on the heels of February’s 50 basis point hike, was largely in line with market expectations and followed a cumulative 600 basis points of hikes since May 2022.

The decision was motivated by the consolidation of the downward trend in inflation: In March, price pressures receded to a two-year low of 5.7%, inching closer to the mid-point of the CBK’s 2.5–7.5% target band. The tight monetary policy backdrop and the recent gains of the shilling against the USD have allowed inflation to decrease further at the outset of 2024. Moreover, the CBK noted robust economic activity in Q1, which gave the Bank room to keep its policy rate at the 12-year high level. As a result, the Bank deemed that the current policy stance would anchor the downward path of inflation towards the mid-point of the target range.

The CBK’s communiqué was void of explicit forward guidance, but the Bank once again underlined that it “stands ready to take further action as necessary in line with its mandate”. That said, our panelists expect the tightening cycle to have reached its peak and our Consensus is for 175 basis points of cuts by end-2024. The next monetary policy meeting will be held in June, with the Bank yet to specify an exact date.

Analysts at the EIU commented on the outlook: “We expect the CBK to make a series of interest-rate cuts in 2024, possibly starting in June, broadly in line with US trends.” In contrast, Goldman Sachs analysts expect monetary easing to begin later: “The next MPC meeting will take place in June. We now see risks of a more front-loaded cutting cycle than implied by our baseline for the first cut to come in Q3 2024 due to the currency and inflation developments and the decline in macro risks on the back of the Eurobond issuance.”

Consensus Forecasts and Projections for the next ten years

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Kenyan interest rate projections for the next ten years from a panel of 7 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Kenyan interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Kenyan interest rate projections.

Want to get access to the full dataset of Kenyan interest rate forecasts? Send an email to info@focus-economics.com.

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