Key questions this article answers:
  1. The Central Bank of Kenya held interest rates steady at its recent meeting; why?
  2. How will this pause in interest rate hikes affect consumers and businesses in Kenya?

On August 9, 2023, the Central Bank of Kenya (CBK) decided to retain its Central Bank Rate (CBR) at 10.5%, retaining the increase it made during the emergency meeting on June 27, 2023. The bank expects inflation to keep slowing, holding tight within its target range of 5% ± 2.5%. The emergency meeting in June was held just over a week after the new CBK governor, Dr Kamau Thugge, assumed office.



Between January 2022 and August 2023, the CBK increased the CBR (benchmark interest rate) five times by 350 basis points to curb rising inflation. But with inflation easing for two consecutive months, the CBK decided to keep rates steady at its August meeting, allowing the previous rate hike to take full effect in the economy. Kenya’s inflation rate fell in July 2023 to 7.3% from 7.9% in June.



What other decisions?

While the CBK kept the interest rates steady, it made key