Recent Kenyan shilling (KES) weakness and higher inflation have started to affect business confidence in Kenya. Inflation rose much faster than expected to 7.1% y/y in April from 5.6% in March.
It decelerated slightly to 6.87% in May, but KES weakness has yet to feed through to inflation, so more upward pressure is likely.
In response, the Central Bank of Kenya (CBK) has brought forward its next Monetary Policy Committee meeting to 9 June.
"We now expect the CBK to hike its policy rate, known as the Central Bank Rate (CBR), 100bps to 9.5% at this meeting, versus keeping the rate on hold as we had expected previously", said Barclays in a report on Monday.