Fitch: Kenya, Uganda hike rates to stave inflation

Fitch Ratings said the recent large interest rate rises in Kenya and Uganda this week are the first tangible demonstration that the countries are tackling the high inflation affecting their economies.

Both countries had been running relatively loose monetary policies despite inflation of 17% in Kenya and 28% in Uganda.

The monetary policy was too loose in both countries and a failure to reduce inflation and stabilize the exchange rate within the context of budget and balance-of-payment deficits was pressuring the ratings, Fitch said.

The inflation is being driven by global food and fuel prices, the regional drought and a weakening currency, the agency said.

But the interest rate rise should help to stabilize the currency and bring down inflation, Fitch said.

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