Kenya’s Central Bank Eases Policy Rate Amid Stable Inflation
Kenya’s Central Bank lowers interest rate to stimulate growth, maintain stability amid low inflation and risks.
The Monetary Policy Committee (MPC) of the Central Bank of Kenya convened on December 5, 2024, to assess economic and financial developments against a backdrop of improving global conditions, declining inflation in advanced economies, and ongoing geopolitical uncertainties. The committee highlighted Kenya’s stable inflation at 2.8% in November, attributed to lower food and fuel prices and a stable exchange rate. Despite a slowdown in economic growth, projected at 5.1% for 2024, the economy shows resilience in key sectors, particularly agriculture and services.
The committee noted improvements in exports, tourism, and remittances, which have bolstered the current account. Foreign reserves remain robust at USD 8.97 billion, providing a buffer against external shocks. Banking sector stability was affirmed, with reduced non-performing loans and adequate liquidity. However, commercial banks were urged to lower lending rates to align with a reduced Central Bank Rate (CBR), now at 11.25%, aimed at stimulating credit and economic activity.
Looking ahead, the MPC emphasized its commitment to maintaining monetary and exchange rate stability while fostering growth. It will reconvene in February 2025 to reassess the economic landscape and policy effectiveness.
