Four monetary policy strategies that will shape CBK’s new leadership
Key questions this article answers:
- Kenya’s banking sector recorded several challenges during Dr Ngoroje, the immediate ex-CBK governor tenure, such as three collapsed banks and stubborn inflation. How do these challenges influence the priorities of CBK’s new leadership?
- What strategies will the CBK’s new leadership deploy to improve Kenya’s banking sector’s outlook?
Dr Kamau Thugge assumed the position of Central Bank of Kenya (CBK) governor on June 18, 2023, succeeding Dr Patrick Njoroge, who held an eight-year tenure marked with its share of successes and challenges.
However, Thugge’s tenure commenced at a critical juncture for Kenya's economy, characterised by a convergence of significant challenges that called for decisive leadership.
Among these challenges was the sustained pressure on the Kenyan shilling, resulting in an unprecedented surge in the official exchange rate. As of June 19, 2023, the shilling was trading at Kes 139.9 against the dollar, an 11.8% depreciation from Kes 123.3 in January of the same year.
Inflation, too, had become a huge challenge, stubbornly lingering at 7.9% and above the Central Bank's upper bound target range of (5% ± 2.5%) as of June 2023.
Amid lower government revenues, ballooning public debt had also constrained the government's fiscal manoeuvrability, leaving minimal leeway
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