Kenya increases policy rate by 200bp to strengthen shilling

Governor says equilibrium rate has been "overshot"

Nairobi, Kenya
Kenyan capital Nairobi

The Central Bank of Kenya (CBK) raised its central bank rate by 200 basis points yesterday (December 5), to 12.5%, as its governor, Kamau Thugge, said the Kenyan shilling had become too weak. 

Yesterday’s decision is the sixth rate increase since May 2022, totalling 550bp. The policy rate is at its highest level since 2012.

In its statement, the CBK’s monetary policy committee said the weakening shilling was a major cause of “sticky” inflation. The October headline reading was 6.8%, down from 6.9%

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