When it comes to interest rates, Kenya is hard to predict. Having cut interest rates from 18 per cent in mid-2012 in great chunks of 150, 200 and 350 basis points to 9.5 per cent, Tuesday’s central bank rate decision was something of a guessing game.

In the end, the bank cut by another 100bp to 8.5 per cent, having held at its previous meeting in March. Around half the analysts polled in advance by Reuters and Bloomberg had predicted a hold in rates. At least no-one was predicting a rise. Continue reading »

Not for Kenya these small 25 basis point interest rate cuts. On Wednesday, the central bank cut its rate by a whopping 350bp from 16.5 per cent to 13 per cent, following an earlier 150bp cut back in July.

The main reason is inflation, which has fallen from nearly 20 per cent at the end of 2011 to single digits, with August’s year on year number coming in at 6.1 per cent from 7.7 per cent in July. So are we done yet? Continue reading »