Kenya Interest Rate1991-2020 Data | 2021-2022 Forecast | Calendar | Historical

The central bank of Kenya kept its benchmark interest rate unchanged at 7% during its June 2020 meeting. Policymakers considered that the package of policy measures adopted since March to cushion the hit from the pandemic were having the intended effect, which will be reinforced by fiscal measures announced in the government's budget for FY2020/2021. The bank said that most recent leading indicators point to strong growth in the Q1 of 2020, while those for the Q2 suggest the impact of the Covid-19 mostly in April, with evidence of recovery in May, supported by higher agricultural output and exports. Meanwhile, inflation is projected to remain within the target range of 2.5-7.5% in the short term. The Committee also welcomed the extension of the central bank's emergency measures on June 24, in particular, those to facilitate official and personal transfers to vulnerable households.

The Central Bank of Kenya kept its benchmark interest rate unchanged at 7% during its May 2020 meeting, as widely expected, after cutting it by 25 bps in April. Policymakers said that the current accommodative monetary policy stance remains appropriate, as policy measures adopted in March and April were having the intended effect on the economy and are still being transmitted. The Committee reaffirmed its growth forecast of 2.3% for 2020, far below a 5.4% expansion in 2019, as economic activity is expected to weaken in the second quarter due to the adverse impact of the containment measures, particularly in transport and storage, trade and accommodation and restaurants. Meanwhile, inflation is expected to remain within the target band of 2.5-7.5% in the near term, supported by the favourable weather conditions, lower international oil prices, the reduction of VAT and muted demand pressures.

The Central Bank of Kenya slashed its benchmark interest rate by 25 bps to 7% during its April 2020 meeting, after cutting it by 100 bps in March. Policymakers said the decision came against a backdrop of the global Covid-19 infection and measures taken by authorities around the world to contain the spread and impact of the pandemic. The bank also assessed its own policy measures adopted in March to protect the economy and noted that they were having the intended effect on the economy, and are still being transmitted, but further action was required due to the continuing adverse economic outlook. Accordingly, the economic growth forecast was revised down to 2.3% this year compared to March's forecast of 3.4% and from an earlier estimate of 6.2%. Meanwhile, inflation is expected to remain within the target band of 2.5–7.5% in the near term, supported by the favourable weather conditions, lower international oil prices, and the reduction of VAT to 14% from 16%.

The Central Bank of Kenya lowered its benchmark interest rate by 100 bps to 7.25% during its March 2020 meeting, surprising markets that expected a smaller 25 bps cut. This marked the third consecutive cut and moved the rate to a near nine-year low, following other central banks that have adopted an accommodative stance to soften the risks associated with the global pandemic. Policymakers said that economic growth is projected to decline markedly to 3.4% in 2020 from a baseline estimate of 6.2%, amid reduced demand by Kenya’s main trading partners, disruptions of supply chains and domestic production. Meanwhile, overall inflation is expected to remain within the target range in the near term, reflecting lower food prices with favorable weather conditions, a decline in international oil prices and muted demand pressures. The Committee also decided to cut the cash reserve ratio by the same margin to 4.25%, to support borrowers that are distressed as a result of COVID-19.