The Central Bank of Kenya raised its policy rate by 2 percentage points to 12.5%, which is the first hike since June when it raised it by 1 percentage point.
The Central Bank of Kenya aims to stabilize the shilling currency, whose depreciation has spurred price pressures, curbed foreign investment, and affected debt servicing.
The central bank’s Monetary Policy Committee (MPC) said in a statement that there is a need to adjust the monetary policy stance to address the pressures on the exchange rate and mitigate second-round effects.
“There is need to adjust the monetary policy stance to address the pressures on the exchange rate and mitigate second-round effects,” the central bank’s Monetary Policy Committee (MPC) said in a statement.
“This will ensure that inflationary expectations remain anchored while setting inflation on a firm downward path towards the 5.0 per cent mid-point of the target range.”
The MPC concluded that it will closely monitor the impact of the policy measures as well as developments in the global and domestic economy and stands ready to further tighten monetary policy as necessary to ensure price and exchange rate stability are achieved, in line with its mandate.
The committee will meet again in February 2024.
