Kenya central bank cuts interest rate for first time in 4 years

Kenya’s central bank Tuesday trimmed its main interest rate for the first time in four years, citing easing inflationary pressures, as the government struggles to raise revenue and service its public debt following deadly protests over tax hikes.  The bank’s monetary policy committee (MPC) cut its main interest rate by a quarter percentage point to […]

Kenya’s central bank Tuesday trimmed its main interest rate for the first time in four years, citing easing inflationary pressures, as the government struggles to raise revenue and service its public debt following deadly protests over tax hikes.

 The bank’s monetary policy committee (MPC) cut its main interest rate by a quarter percentage point to 12.75 per cent.

 “The MPC noted that its previous measures have lowered overall inflation to below the mid-point of the target range, stabilised the exchange rate, and anchored inflationary expectations,” the bank’s governor and chairman of the MPC, Kamau Thugge, said in a statement.

 Kenya’s overall annual inflation rate fell to 4.3 per cent in July from 4.6 per cent in June.

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 “The MPC concluded that there was scope for a gradual easing of the monetary policy stance while ensuring continued exchange rate stability,” it added.

 The rate cut comes as Kenyan President William Ruto seeks to ease the worst crisis of his near-two-year presidency when protests over tax hikes turned violent in June.

 He scrapped deeply unpopular tax increases, introduced amidst a cost-of-living crisis, that were meant to reduce public debt standing at $78 billion, according to treasury records.

Kenya’s Court of Appeal also annulled the controversial tax hikes adopted in 2023 over procedural issues at the end of July.

Ruto sacked most of his cabinet in July and has been working to form a national unity government.