As global economic pressures mount, the Central Bank of Kenya (CBK) is weighing policy shifts to shield the country from external shocks stemming from heightened trade tensions. The recent decision by the United States to impose sweeping tariffs on imports has triggered alarm among financial institutions worldwide — and Kenya is no exception.
In its latest bulletin, the CBK emphasized the risk posed by the new 10 percent trade tariff introduced by the US administration, warning it could fuel inflation globally and rattle already fragile financial markets. For Kenya, the ripple effects could manifest in exchange rate fluctuations, increased import costs, and potential investor retreat from the equities and bond markets.
“However, trade tensions escalated during the week following the announcement of new tariffs by the US administration on all US imports, raising concerns about inflation, supply chain disruptions, and financial market volatility,” CBK stated.
This development comes at a critical time for Kenya’s monetary policy. With inflation still below CBK’s 5 percent midpoint target — currently at 3.6 percent according to the Kenya National Bureau of Statistics — the bank is widely expected to consider a fifth consecutive rate cut in a bid to sustain domestic economic momentum.
Analysts say the central bank now faces a delicate balancing act: stimulate local demand while insulating the economy from unpredictable global headwinds. The next policy decision on Tuesday will be closely watched as a gauge of how far CBK is willing to go to manage emerging risks.
