Money in Kenya
Kenya - Money
Central Bank surprises markets by axing rate again in January
At its first meeting of the year on 27 January, the Monetary Policy Committee (MPC) of Kenya’s Central Bank decided to cut the Central Bank Rate by 25 basis point to 8.25%. This marked the second consecutive cut and moved the rate to an over eight-year low. The decision came as a surprise to markets, which had been expecting the Bank to stay put.
Benign inflation expectations and below-potential economic growth drove the Bank’s decision to axe the rate. Although inflation rose to 5.8% in December (November: 5.6%), the Bank considers that this increase reflects temporary effects stemming from higher food and transport prices during the holiday season, as core inflation remains below the 5.0% midpoint of the 2.5%–7.5% target range. In addition, the Bank judged there was room for further easing in order to boost supply of credit and, in turn, economic activity despite noting that the impact of November’s rate cut—amid the repeal of the interest rate cap law—is still being transmitted into the economy.
In terms of forward guidance, the Bank stated that it will closely keep track of the impact of this looser policy stance by monitoring “developments in the global and domestic economy” and stated that it is ready to take any further measures, should they be necessary.
The next monetary policy meeting is scheduled for 27 March 2020.
FocusEconomics Consensus Forecast panelists are currently revising their forecasts based on this latest development and new Consensus Forecasts will be released on 25 February.
Kenya - Money Data
|Money (annual variation in %)||18.6||14.2||4.2||7.4||8.0|
5 years of economic forecasts for more than 30 economic indicators.
Kenya Money 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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February 5, 2020
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank—fell markedly to 49.7 in January from 53.3 in December, thus dropping below the 50-threshold that indicates a deterioration in business conditions in the private sector for the first time since April 2019. January’s drop largely reflected falling output and slowing new order growth.
January 31, 2020
Consumer prices rose 0.31% over the previous month in January, down from December’s 0.90% rise, which had marked the fastest rise since April 2019.
January 27, 2020
At its first meeting of the year on 27 January, the Monetary Policy Committee (MPC) of Kenya’s Central Bank decided to cut the Central Bank Rate by 25 basis point to 8.25%.
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.