The latest interest rate hike by the Central Bank of Kenya (CBK), raising the central bank rate (CBR) by 50 basis points to 13.0 percent, risks substantially damaging small and medium enterprises (SMEs) and broader economic growth prospects, outweighing the intended benefits of tighter monetary policy.
In its statement, the CBK highlighted the need to anchor inflation expectations among the reasons for its decision. However, considering the vulnerability of Kenya's economy, aggressively tightening policy could prove severely misguided.
