Kenya cuts rates on anchored inflation and tight fiscal outlook

Central bank reduces bank rate by 50 basis points to 8.5%

Patrick Njoroge

The Central Bank of Kenya reduced interest rates by 50 basis points today (November 25) in a bid to offset the tight fiscal policy implemented by the government.

As a result, the central bank rate is now at 8.5%. The looser policy approach is possibly due to what policy-makers view as anchored inflation expectations. In October, year-on-year inflation was recorded at 4.9%. The central bank’s goal is for prices to rise annually by 5%, within a +/–2.5% range.

“Overall, inflation is expected to

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