Kenya: Kenya Hikes Interest Rate to 8.25%

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The central bank of Kenya raised its benchmark interest rate by 75 basis points to 8.25% at its September 2022 meeting, surprising markets that expected it to remain steady at 7.5%.

The hawkish adjustment marks the second straight rate hike this year, bringing borrowing costs to the highest since February of 2020, to combat persistent inflationary pressures in a context of elevated global risks.

Kenya’s headline inflation rate accelerated for the sixth straight month to an over five-year high of 8.5% in August, almost in line with market forecasts.

“There was scope for a tightening of the monetary policy in order to further anchor inflation expectations,” the Monetary Policy Committee said.

Still, the economy was expected to be resilient for the rest of this year, the committee said, citing fresh optimism after the peaceful conclusion of a divisive presidential election and robust private sector growth.

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