- Kenyan government anticipates inflation to reach the Central Bank's target of 5% by 2023.
- Tightened monetary policy with a constant CBR rate of 10.5% since June 2023 has raised interest rates.
- To mitigate the impact of increased interest rates, the government plans non-monetary measures.
According to a Parliamentary Budget Office study, the Kenyan government expects inflation to drop to the Central Bank of Kenya (CBK) target range of 5% in 2023.
According to the research, the depreciation of the Kenyan shilling and unfavorable meteorological conditions were the primary causes of inflation in 2022, which totaled 7.6% on average. “To avert a further escalation in inflation, the CBK has sustained a tightened monetary policy by maintaining the CBR rate at 10.5 percent since June 2023,” it said.
According to the research, tighter monetary policy has increased interest rates on government assets while also easing inflationary pressures. It also noted that bank lending rates had increased and that credit growth to the private sector may have slowed down.