This archive report was first published on 15 January 2020.
On January 27th, the Central Bank of Kenya's Monetary Policy Committee will convene to assess the country's economic conditions and determine the Central Bank Rate. This bi-monthly meeting is a crucial event in Kenya's economic calendar.
At its last meeting on November 25th, the committee made a significant move by lowering the Central Bank Rate by 50 basis points to 8.5%. This decision was influenced by the repeal of the interest rate cap, which the committee saw as restoring clarity to monetary policy decisions.
However, analysts are now divided on the committee's next move. Some, like Churchill Ogutu of Genghis Capital, believe that the central bank will wait to assess the impact of the previous rate cut before making another decision.
“The central bank will probably wait to assess the impact of the 50 basis-point cut two months ago before easing again,” Ogutu told Bloomberg.
On the other hand, some observers expect the Central Bank to lower the policy rate to encourage economic growth. Vinita Kotedia of EFG Hermes Kenya is one such analyst, who believes that the Central Bank could cut its policy rate by another 50 basis points to 100 basis points by the end of the first quarter.
“The Central Bank could cut its policy rate by another 50 basis points to 100 basis points by the end of the first quarter,” Kotedia told Bloomberg.
Kenya's economic growth has been slower than expected, with data from the Kenya National Bureau of Statistics showing that the country's third-quarter growth dipped to 5.1% in 2019. This has led to a revision of the country's GDP growth forecast for 2019.
