Key questions
- The Central Bank of Kenya increased rates by 200 basis points. Why was the Monetary Policy Committee hike a shock?
- How does the recent 200 basis point increase in the Central Bank of Kenya's benchmark rate to 12.5% impact the banking sector's non-performing loan (NPL) stock?
On December 5, 2023, the Central Bank of Kenya (CBK) increased the benchmark policy rate by 200 basis points from 10.5% to 12.5%.
This was the third hike in the year and the most significant since November 2011, when the apex bank hiked the benchmark rate by 550 basis points from 11.0% to 16.5%.
The CBK's decision to raise interest rates is set to have mixed effects on the country's banking sector, a key focus of this Stears report. While unexpected, this move reflects a proactive approach to the evolving economic landscape in Kenya.
As of December, headline inflation slightly decreased to 6.6% year-on-year
