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Fallouts from Middle East crisis limit CBK fiscal policy options
The Governor of the Central Bank of Kenya (CBK) Dr Kamau Thugge when he appeared before the Finance and National Planning Committee chaired by Kuria Kimani at the Bunge Tower in Nairobi on March 25, 2025.
Uncertainty over the ongoing US-Israel war with Iran placed the Central Bank of Kenya (CBK) policy maneuvers on ice, with the apex bank keeping its benchmark rate unchanged at 8.75 percent for a second consecutive round.
The CBK sees the higher inflation emanating from the war as transitory, even as it assesses other macroeconomic factors, including food prices and the exchange rate, as stable. The apex bank does not expect the inflation rate to breach the 7.5 percent ceiling over the next 12 months but is banking on a near-term de-escalation in the Middle East for its softer inflation outlook to hold.
