By Divya Chowdhury and Lisa Pauline Mattackal
DAVOS, Switzerland (Reuters) – Kenya’s central bank expects inflation to fall within its target range during the first quarter of 2023 and is comfortable with its trajectory, Governor Patrick Njoroge said at the World Economic Forum in Davos, Switzerland.
“We are not comfortable with where it is now, but are comfortable that it’s coming down, and we expect it to be in our target range sometime this quarter,” Njoroge said on the sidelines of the annual WEF meeting.
Kenya’s inflation in December dipped to 9.1%, still above the bank’s target range of 2.5% to 7.5%.
“The prospects are good for various reasons, including that the price of oil has been coming down,” Njoroge said in an interview with the Reuters Global Markets Forum.
With that in mind, the bank expects the Kenyan economy to grow 6.2% this year, Njoroge said, and does not expect a potential global recession to be “unmanageable”.
That compares to earlier forecasts of 6%, and above the World’s Bank prediction that East Africa’s largest economy would slow to 5% growth from 5.5% in 2022.
The bank is also comfortable with the current state and projections for its foreign exchange reserves, Njoroge said, after those reserves slipped below the required four months worth of import cover last November.
The bank is also not worried about depreciation of the Kenyan shilling, and expects more external financing to support the government budget, Njoroge said.
The Kenyan shilling has slipped 0.54% against the U.S. dollar this year after falling over 9% in 2022.
(Reporting by Divya Chowdhury in Davos and and Lisa Pauline Mattackal; Additional reporting by Duncan Miriri; Editing by Angus MacSwan)
