East Africa’s Central Banks Hold Steady Amid Low Inflation
- Jan 16
- 4 min read
January 16, 2026
East African central banks are entering 2026 with a cautious but optimistic stance. With inflation rates easing to multi-month lows and currencies largely stable, monetary policymakers in Uganda, Tanzania, and Kenya have opted to hold or even ease their benchmark interest rates. This coordinated trend reflects confidence that price stability can be maintained while providing room for policies that support economic growth in the region.
Uganda: Policy Rate Unchanged as Inflation Falls
The Bank of Uganda (BoU) kept its Central Bank Rate at 9.75% for a fifth straight meeting, citing tame inflation and a strengthening economy. Annual headline inflation slipped to 3.45% in October 2025, about a seven-month low and well below the 5% target mid-point. Just days before the decision, S&P Global Ratings upgraded Uganda’s sovereign outlook to “positive” from “stable” on improved growth prospects. BoU’s Monetary Policy Committee noted that prudent policy, a stronger shilling, and favorable energy prices have kept inflation subdued. Officials emphasized balancing price stability with sustainable growth, while remaining alert to potential global and domestic risks ahead.
Tanzania: Rates Held at 5.75% to Support Growth
The Bank of Tanzania (BoT) likewise held its benchmark rate at 5.75% going into the first quarter of 2026. Policymakers highlighted that inflation is stable in the 3–4% range, comfortably within the target band of 3–5%. With price pressures contained, the BoT has prioritized an accommodative stance to support robust economic growth. In fact, the central bank noted it had room to maintain this growth-friendly policy, after having cautiously trimmed rates mid-2025 for the first time in two years. A recent statement stressed that keeping the policy rate unchanged should help sustain credit expansion and momentum in sectors like agriculture and construction. The Tanzanian shilling has remained broadly steady – even appreciating ~0.8% against the US dollar by late 2025 – and foreign reserves are healthy at about 4.9 months of import cover. These factors give authorities confidence that monetary settings are appropriate for now, barring any new shocks.
Kenya: Ninth Consecutive Cut as Inflation Eases
Kenya’s central bank took a more stimulative turn, cutting its key rate to 9.00% in December – the ninth consecutive reduction in an ongoing easing cycle. The 25 basis-point cut comes as annual inflation decelerated to 4.5% in November, comfortably within the official 2.5–7.5% target range. With price growth subdued, the Central Bank of Kenya (CBK) is aiming to spur bank lending and economic activity. The Kenyan economy has been expanding at roughly a 5% annual pace, and the bank maintained its GDP growth forecasts of about 5.2% for 2025 and 5.5% for 2026. In its policy statement, the CBK noted the latest cut “will augment previous actions” to support growth while keeping inflation expectations anchored and the exchange rate stable. Officials did caution that risks such as a potential drought could weigh on the outlook, but overall they project continued steady growth underpinned by the more accommodative policy stance.
Regional Trends: Stability, Optimism, and Policy Space
Several common themes emerge from these East African monetary decisions. Inflation is low and trending downward across the region, hovering around 3–4.5% – near the bottom of target ranges – thanks in part to prudent monetary policy and favorable conditions. This has kept currencies broadly stable, reinforcing price stability (for instance, Tanzania’s shilling modestly strengthened late last year, and Uganda’s shilling remains firm, while Kenya’s shilling stability has helped contain import costs). Central bankers are voicing cautious optimism: economic growth is holding up in all three countries (Kenya ~5%, Tanzania ~6%, Uganda ~6–7% projected) and external buffers like reserves are solid, yet policymakers remain vigilant about risks like commodity price swings or weather shocks. Crucially, the current low-inflation environment is giving these central banks space for counter-cyclical policy – they can afford to pause or ease rates to support growth without undermining price stability. As global conditions evolve, East Africa’s central bankers appear ready to adjust levers as needed, but for now their steady or easing stance signals confidence that macroeconomic fundamentals are on sound footing.
Verī Platform: Supporting Advisors with Risk Monitoring and Diversification
Amid this favorable backdrop, financial advisers and institutions in East Africa are turning to technology platforms like Verī to navigate the interest rate cycle. The Verī Platform – an Africa-based investment infrastructure – helps firms monitor interest rate exposure and inflation risks in their portfolios across multiple markets. By providing access to a wide spectrum of assets and real-time data, Verī enables users to see how shifts in rates or price levels could impact bond holdings, loan books, and other interest-sensitive investments. It also facilitates local and regional diversification across borders, connecting East African markets under one roof for seamless cross-border investing. For example, an advisor in Nairobi can use Verī to compare opportunities in Ugandan government bonds or Tanzanian equities, helping clients capitalize on regional yield differentials while mitigating country-specific risks. The platform’s global integration means even inflation-protected securities (like U.S. TIPS ETFs) can be incorporated into African portfolios, giving inflation hedge exposure alongside domestic assets. In short, Verī provides tools for transparency and risk management – from tracking interest rate trends to balancing currency and inflation considerations – so that East African investors and institutions can confidently pursue growth while staying protected against macroeconomic shifts.
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