Interest Rate in Kenya
Kenya - Interest Rate
Central Bank slashes rates in November
At its meeting on 25 November, the Monetary Policy Committee (MPC) of Kenya’s Central Bank decided to axe the central bank rate by 50 basis points to 8.50%, marking the first cut in 16 months. The decision had been broadly expected by market analysts.
Against a background of well-anchored inflation and inflation expectations, the Bank opted to slash the monetary policy rate in November to spur economic activity. Although inflation accelerated to 4.9% in October (September: 3.8%), the MPC noted that the increase largely reflected temporary factors given that core inflation metrics remain well below the midpoint of the 2.5%–7.5% target band. In addition, the ongoing tightening of fiscal policy provided room for a more accommodative stance, especially after the repeal of the interest rate cap law which had for years hindered the transmission of monetary policy.
While the Bank provided little substantive forward-looking guidance, the Bank will likely stand pat in the near-term given that inflation is expected to remain within the target range and the repeal of the interest cap law ought to boost the private sector’s access credit. Nevertheless, adverse weather condition and oil price volatility continue to pose upside risks to inflation ahead.
The next monetary policy meeting is scheduled for 20 January 2020.
FocusEconomics Consensus Forecast panelists have yet to account for the Bank’s latest decision.
Kenya - Interest Rate Data
|Policy Interest Rate (%)||8.50||8.50||11.50||10.00||10.00|
5 years of economic forecasts for more than 30 economic indicators.
Kenya Interest Rate Chart
Source: Central Bank of Kenya
|Bond Yield||12.20||0.0 %||Dec 31|
|Exchange Rate||101.4||0.05 %||Jan 01|
|Stock Market||0.4||0.0 %||Jan 07|
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January 6, 2020
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank—came in at 53.3 in December, up from November’s 53.2 reading and thus climbing further above the 50-threshold that indicates an improvement in business conditions. New orders rose sharply in December amid increased referrals from clients as did new export orders on stronger demand from European markets.
December 31, 2019
Year-on-year growth slowed to 5.1% in the third quarter of 2019, down from the second quarter’s 5.6% and marking the lowest reading since Q3 2017, according to Kenya’s Statistical Institute (KNBS). The third-quarter moderation largely reflected a broad-based slowdown in activity across all sectors.
December 31, 2019
Consumer prices rose 0.90% over the previous month in December, up from November’s 0.41% increase and marking the highest reading since April.
December 4, 2019
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank—came in at 53.2 in November, matching October’s reading, thus staying above the critical 50-threshold that separates expansion from contraction and signaling a healthy rate of growth in activity.
November 30, 2019
Consumer prices rose 0.41% over the previous month in November, up from October’s 0.28% increase.