Kenya: CBK Raises Rate to 12.5% to Contain Inflation, Currency Devaluation

The city centre of Nairobi (file photo).
6 December 2023

Nairobi — Kenyans are set to pay more for loans after the Central Bank of Kenya (CBK) Monetary Policy Committee (MPC) increased its rate.

MPC yesterday hiked the CBK rate from 10.5 percent to 12.5 percent to contain inflation and Kenyan shilling depreciation against major global currencies such as the American Dollar, among others.

The Kenyan inflation rate has been edging closer to 7 percent for a few months. Last month, for example, the country's inflation eased slightly to 6.8 percent from 6.9 percent in October.

However, CBK warned of an elevated risk of inflation.

Likewise, the Kenya shilling has been under immense pressure from the American greenback due to high demand.

Currently, one American dollar is equal to Sh153.3.

"The MPC therefore concluded that there is need to adjust the monetary policy stance to address the pressures on the exchange rate and mitigate second round effects including from global prices," CBK said in a statement.

"This will ensure that inflationary expectations remain anchored, while setting inflation on a firm downward path towards the 5.0 percent mid-point of the target range."

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