Kenya’s Central Bank raises lending rate to 12.5% in bid to stem inflation
Kenya’s Central Bank raised its policy lending rate by a record 200 basis points to hit 12.5 per cent in the bank’s latest attempt to place a lid on rising inflation even as the local currency stayed on a depreciating streak. Jeniffer Tivane, Manager, Structured Products, Africa Regions, Standard Bank Group to unpack MPC decisions in Kenya and Uganda as well as the latest PMI numbers.
Wed, 06 Dec 2023 15:16:49 GMT
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AI Generated Summary
- The Central Bank of Kenya raised its lending rate by 200 basis points to 12.5% to combat rising inflation and stabilize the local currency.
- Inflation in Kenya slightly decreased to 6.8% in November, driven largely by currency depreciation and higher import prices.
- The Purchasing Managers' Index reflected mixed sentiments, with Kenya experiencing a downturn in private sector activity while Uganda saw sustained growth.
Kenya’s Central Bank made a bold move by raising its policy lending rate by a record 200 basis points to 12.5 per cent in an effort to curb rising inflation and stabilize the local currency, which has been on a depreciating trend. This significant rate hike, the largest since 2011, aims to guide consumer price inflation towards the target range set by the Central Bank of Kenya. The decision comes against a backdrop of challenges posed by the weakened Kenyan shilling, which has lost nearly 20 per cent of its value against the dollar this year. Inflation in November eased slightly to 6.8 per cent from 6.9 per cent in October, hovering close to the upper threshold of the target band at 7.5 per cent. The spike in prices was partly driven by currency depreciation, accounting for about half of the overall price increase observed in November.
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