Central Bank of Kenya Cuts Benchmark Rate by 25 Basis Points to 12.75%

The Central Bank of Kenya has cut its Central Bank Rate by 25 basis points, lowering the benchmark from 13.00% to 12.75%. The Monetary Policy Committee announced the decision on 6 August 2024, pointing to inflation running well within the government's target band and relative stability in the Kenyan shilling as the principal conditions that created room for an initial easing of monetary policy. The decision marks the first downward move in the CBR after an extended period of tightening.

Inflation stood at 4.3% at the time of the August meeting, within the government's target range of 2.5% to 7.5%.

The MPC said exchange rate stability had been achieved and inflation expectations remained anchored, giving scope for a gradual easing of the monetary policy stance while ensuring continued exchange rate stability.

PRIOR TIGHTENING AND OUTLOOK

The 25 basis point reduction followed a tightening cycle that had included a 200 basis point increase in December 2023.

The MPC stated that it would continue to monitor incoming data on inflation, private sector credit growth, and global developments closely, and that it stood ready to act as circumstances required.