Monetary stance paying off, says CBK amid falling inflation trend

Kenya has continued to enjoy a stable inflation rate, thanks to lower food inflation, stable energy price inflation, and continued exchange rate stability

The latest data from the Central Bank of Kenya (CBK) indicates that overall inflation dropped to 4.1 per cent in April 2025, from an average of 4.5 per cent in 2024 and 7.7 per cent in 2023.

CBK Deputy Governor Susan Koech said this trend is backed by monetary policy measures and stability in the foreign exchange market.

The deputy governor spoke to over 3,000 accountants in Mombasa during the 42nd annual seminar of the Institute of Certified Public Accountants of Kenya (ICPAK) on Friday.

“We expect inflation to remain within the target range going forward, supported by lower food inflation, stable energy price inflation, and continued exchange rate stability.

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“The overall inflation stood at 4.1 per cent in April 2025, having declined from an average of 4.5 per cent in 2024 and 7.7 per cent in 2023,” said Ms Koech. She said the country registered an improved export of goods and services, strong diaspora remittance inflows, and lower oil imports facilitated by a narrow account deficit.

At the same time, Ms Koech noted that the foreign exchange market remained stable, supported by a narrowing in the current account deficit and improved investor confidence in the economy.

She said the current account deficit is estimated to have narrowed to 1.3 per cent of GDP in 2024 from a revised deficit of 2.5 per cent of GDP in 2023.

She said the capital and financial inflows majorly financed the current account deficit, resulting in an overall balance of payment surplus and a buildup in foreign exchange reserves.

“We expect the favourable external sector conditions to be sustained this year, albeit the emerging risks from the global environment,” said Ms Koech.

She said Kenya is expected to post a projected 5.4 per cent GDP growth from 4.7 per cent registered in 2024.

She said the growth is supported by the resilience of key service sectors and the agriculture sector, expected recovery in growth of credit to the private sector, and improved exports.

Ms Koech said the outlook for global growth in 2025 has been revised down to 2.8 per cent from the previous projection of 3.3 per cent due to higher tariffs on imports and uncertainties over trade policy.

“Our economy demonstrated resilience in the face of global and domestic shocks, registering a real GDP growth of 4.7 per cent in 2024 and is expected to perform better in 2025 with a projected growth of 5.4 per cent,” she said.

The ongoing implementation of the fiscal consolidation plan, the deputy governor said, will contain public expenditures, enhance revenue mobilisation and result in the desired reduction of the fiscal deficit without compromising service delivery.

Equity Bank Chief Executive James Mwangi urged the government to use Public-Private Partnerships (PPPs) to reduce public debt and deficits that have weighed the nation down.

Mr Mwangi said for every Sh100 collected, between Sh50 and Sh70 per cent goes to debt repayment.

He said four per cent of the GDP from the private sector can easily fund the world’s GDP.

“The future of development in Kenya will be done through PPP. Debt and deficit have become unsustainable. Four per cent of the GDP of the private sector will fund the GDP of the world,” said the Equity boss.