Central Banks
Kenya Surprises by Hiking Key Rate to Almost 12-Year High
- Rate increase is third since governor appointed in June
- Central bank expects move to lower inflation toward target
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The Central Bank of Kenya surprised financial markets by raising borrowing costs to their highest level since 2012 as risks to inflation remain elevated and to support the shilling. Bonds fell.
The monetary policy committee lifted its benchmark rate to 13% from 12.5%, Governor Kamau Thugge said Tuesday in an emailed statement. Of the eight economists in a Bloomberg survey, only two expected a hike. The raise, the third since Thugge became governor in June, is the seventh in the current tightening cycle that started in May 2022 and brings the total combined increases to 600 basis points.