Monetary tightening helps Kenya’s shilling to stabilise

Kenya's Central Bank Governor, Kamau Thugge, has made a resolute commitment to continue implementing robust measures to curb inflation and stabilize the local currency. In a recent interview with CNBC Africa, Governor Thugge emphasized the necessity of taking decisive actions in response to rapid depreciations in the exchange rate, driven in part by the tightening of monetary policies in advanced economies. The Governor acknowledged the challenging nature of the situation, citing the significant increase of 350 basis points in the policy rate within a short span of six to seven months as a crucial step taken to address price and exchange rate pressures. Despite the difficulty of these actions, Governor Thugge expressed satisfaction in the positive outcomes achieved, particularly in the appreciation of the local currency. The Kenyan shilling has emerged as the strongest performing currency globally this year, registering a remarkable 17% appreciation against the US dollar. Moreover, the country's stock market has experienced notable growth, positioning it as one of the top-performing exchanges worldwide. Governor Thugge highlighted the importance of African countries being prepared to implement strong measures to combat inflationary challenges and emphasized the benefits that can be derived from proactively addressing such economic pressures. In offering advice to his regional counterparts grappling with similar difficulties, Governor Thugge underscored the significance of timely and resolute actions, cautioning against delaying necessary measures that may result in the need for more severe interventions in the future. The success witnessed in Kenya serves as a testament to the effectiveness of proactive measures in mitigating economic challenges and fostering stability in the financial landscape.