Central Bank of Kenya (CBK) will tomorrow convene this year’s second monetary policy committee (MPC) meeting to review the country’s economic trajectory amid banking turmoil in the global market and the weakening of the Kenya shilling.

In the last MPC meeting in January, the apex bank retained the policy rate, the Central Bank Rate (CBR) at 8.75 per cent, to match the softening inflationary pressures but unpromising global economic outlook.

The retention of the CBR was key in shaping various economic variables such as lending rates by banks, output costs, prices of commodities, the exchange rate, and stock market prices. CBK is now set to relook at some of these factors in an attempt to correct the market situation.

Kenya’s inflation has been cooling down marginally for the past three months until last February when the cost of living rose again to 9.2 per cent, which could even worsen further from next month as the government increases the cost of electricity by up to 63 per cent.

Analysts believe that a slightly higher rate may be necessary tomorrow to restore price stability while matching last week’s US Fed rate hike that significantly influences economic policies for developing countries like Kenya.

“Overall, we expect the MPC to adopt a hawkish stance and hike the CBR by 25bps in the March meeting in order to anchor rising inflation expectations while supporting a healthy private sector credit growth momentum,” Genghis Capital said in its topical note ahead of MPC tomorrow.