Inflation in Kenya reached 6.8% in September 2026, slightly up from 6.6% in August 2026. The Central Bank of Kenya (CBK) decided to keep its key interest rate unchanged at 8.75% after a meeting of its Monetary Policy Committee (MPC) on October 7, 2026. This decision is intended to support both stable prices and a stable currency, as the Kenyan economy is expected to grow more than previously predicted in 2026. Underlying inflation, which measures the rate of price increases excluding volatile items like food and energy, also rose to 4%, up from 3.4% the previous month, mainly due to higher prices for processed food products. However, the CBK believes that inflationary pressures will remain under control in the near future. The bank noted that overall inflation should stay within the target range in the short term, citing factors such as a stable exchange rate, government measures, and the expectation that food prices may fall due to above-average rainfall between October and December. The CBK also revised its 2026 GDP growth forecast upward to 5%, compared to the earlier estimate of 4.9%. This change reflects the strong performance of the industry and services sectors. For 2027, the bank continues to predict a growth rate of 5.3%. Despite this optimism, the CBK remains cautious about potential risks, including rising energy prices, geopolitical tensions in the Middle East, trade uncertainties, and the possible impact of the El Niño weather phenomenon. These factors could affect Kenya's economic outlook and policy decisions. On the external accounts side, Kenya's current account deficit—representing the difference between the value of goods and services imported and exported—was estimated at 3.1% of GDP for the twelve months ending August 2026. This is expected to rise slightly to 3.2% of GDP for the full year. The country’s foreign exchange reserves, which are crucial for maintaining a stable currency and supporting international trade, stood at $14.7 billion as of the latest data. This amount is equivalent to about 5.9 months of import coverage, providing a buffer against economic shocks. The CBK's decisions and forecasts highlight the balance it seeks between promoting economic growth and maintaining price and exchange rate stability. While the economy shows resilience, the bank remains vigilant about external and internal challenges that could affect Kenya's economic trajectory.