Kenya’s Central Bank has slashed its benchmark interest rate by 75 basis points to 12 per cent. This decision was made at a meeting on October 8, 2024 and marks the second consecutive rate cut in two months.
In August, the central bank reduced the rate by 25 basis points, from 13 per cent to 12.75 per cent. This marked the bank’s first cut in nearly four years. The recent decision was influenced by a slowdown in private sector credit and economic growth in the second quarter of 2024. The bank lowered its 2024 growth forecast from 5.4 per cent to 5.1 per owing to its report of a sluggish second quarter.
The rate cut reduction comes as inflation dropped to 3.6 per cent in September, its lowest level since 2012. The Kenyan shilling also experienced a measure of stability. The country’s foreign exchange reserves has also remained strong at $8.25 billion. Analysts expect recovery in 2025 with a 5.5 per cent growth forecast.
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