Kenya’s Delicate Economic Balancing Act

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Which Way Interest Rates?

By TKWS

Kenya’s central bank’s Monetary Policy Committee (MPC) is set to meet this week on Tuesday, June 9th, to chart the way forward for the country’s monetary policy. On the table is a slew of factors that make it one of the most consequential meetings in recent years. The Israel-US-Iran war is still in an uneasy stalemate, placing global economies in a bind as initial optimism for a fast resolution makes way for more realistic bracing for prolonged economic crises.

The apex bank has held the policy rate at 8.75% for two consecutive meetings, following ten successive cuts dating back to August 2024, its longest ever cutting streak. While geopolitical realities always come into play in such decisions, they have mainly been secondary to the CBK’s desire to stimulate private activity and boost employment.

The Middle East conflict has made the geopolitical plane the more primary consideration, as it has triggered inflation, disrupted trade routes and supply chains, and infused the most intense global uncertainty since the pandemic. The latest Stanbic Bank Kenya PMI, with a headline reading of 46.6 in May from 49.4 in April, indicates a steady deterioration of business activity and the sharpest uptick in purchase costs since November 2023.

“Inflationary pressures have intensified, constraining demand conditions, with input prices, purchase costs and output prices driven up by higher fuel and transportation costs.” Christopher Legilisho, Economist at Standard Bank said.

The downturn has already had immediate effects likely to reverberate through the economy, such as firms cutting their temporary workforce numbers for the first time in 16 months. At the sector level, only manufacturing companies recorded growth in production as all other sectors, especially construction and services firms, posted declines.

Kenya’s bankers are lobbying for a rate increase, which would be the first since December 2023. On the other hand, the multiple macroeconomic pressures that drove the unprecedented rate cuts are still in play, now worsened by trade and supply chain disruptions. A hold is the most likely outcome, but with inflation at a cycle high and supply-side pressures broadening into transport and energy, the next move in rates is more likely up than down.

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The Vast Potential of Kenya’s Creative Economy

By Angela Ng’ang’a

Spanning film, music, digital content, gaming, fashion, and sports, Kenya’s creative sector has emerged as one of Africa's most dynamic growth frontiers, propelled by digital adoption, favorable demographics, progressive policy reform, and deepening international partnerships. Estimated at approximately US$ 3–4 billion, conversations around this critical sector is moving beyond inspiration toward practical pathways—unlocking investment, expanding financing models, and supporting creators in building sustainable enterprises. 

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