The International Monetary Fund (IMF), through its Monetary and Capital Markets Department, and experts from the Bank of Canada have helped the Central Bank of Kenya (CBK) overhaul its Core Quarterly Projection Model (QPM), the main tool used to forecast inflation, economic growth, interest rates, and exchange-rate movements. The upgrade comes as Kenya deepens its inflation-targeting framework, which aims to keep inflation at 5 percent, with a tolerance band of ±2.5 percentage points.
The report highlights that the previous model, first developed in 2014, no longer fully reflects Kenya’s changing economic structure. The new version is designed to improve forecasting accuracy, strengthen monetary policy decisions, and provide…