Kenya Sets Trend in East Africa as Tanzania Adopts Similar Strategy


Kenya Sets Trend in East Africa as Tanzania Adopts Similar Strategy

The Central Bank of Kenya’s (CBK) decision to increase the benchmark lending rate from 12.5% to 13.5% in February and March, and then maintain it at that level, seems to have established a pattern for other East African nations.

CBK Governor Kamau Thugge said on Wednesday that the policy choice has had a favorable impact, including reducing inflation and resolving exchange rate concerns.

Tanzania seems to have taken a hint from Kenya’s efforts to address its inflation problem, which has depressed the country’s economic prospects.


On April 4, Tanzania increased its benchmark lending rate from 5.5 percent to 6%. The governor of Tanzania’s central bank announced the rate rise.

“The decision is based on the macroeconomic forecast made in March which requires an increase in the scope of monetary policy actions to contain the lingering inflationary pressures,” stated the governor.

However, according to economist Professor XN Inaki, Tanzania’s move to boost its lending rate to 6% may have a little lesser effect than Kenya’s.

“Tanzania is a different economy- we can wait and see, but Tanzania’s hike was much lower than Kenya’s and the impact is likely to be less,” stated the economist.

According to him, nations may manage inflation by importing commodities or increasing production via non-rain-fed agriculture, in addition to rising lending rates.

Meanwhile, Uganda has just used a similar technique to meet its own set of specific challenges.

Uganda increased its base lending rate to 10% on March 6 in order to combat the currency decline, which had a significant impact on the country’s economy.

“The depreciation of the shilling exchange rate has triggered the need for monetary policy to be tightened,” the Central Bank of Uganda’s deputy governor noted.

Uganda’s bank governor linked the Shilling’s decline to offshore investors withdrawing cash from Uganda in search of greater rewards abroad, a trend that led the nation to increase interest rates.

In Other News: UDA Fires Back At Raila’s Ultimatum Demanding Resignation Of Ruto Allies

Kenya Sets Trend in East Africa as Tanzania Adopts Similar Strategy



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