Kenya’s central bank governor, Kamau Thugge, has indicated that U.S. President Donald Trump’s focus on boosting domestic oil and gas production could positively influence Kenya’s inflation. The potential increase in global energy supply might reduce fuel costs, indirectly benefiting Kenya’s economy.
Trump’s commitment to expanding the United States’ energy output, encapsulated in his pledge to “drill, baby, drill,” is expected to lower global oil prices. With Brent crude already dropping below $80 a barrel, this trend could ease price pressures in Kenya, which relies entirely on imports to meet its annual petroleum consumption of 5.5 million cubic meters.
Governor Thugge stated that if Trump’s energy initiatives result in reduced fuel costs, this would likely lower inflation in the U.S. and globally. He emphasized that Kenya could also experience relief from such changes, especially given that the country’s inflation is heavily influenced by volatile global commodity prices and unpredictable local weather patterns.
Despite Kenya’s oil discovery in 2012, the nation has not advanced toward commercial production, leaving it dependent on imports to meet its energy demands. This reliance exposes Kenya to international price fluctuations.
Inflation in Kenya reached a 14-year low of 2.7% last year but is projected to rise slightly to about 3.3% by March. The central bank remains vigilant, with Thugge noting that the monetary policy committee would carefully assess the broader impact of U.S. energy policies.
He also highlighted that Trump’s approach might lead to elevated U.S. interest rates, potentially redirecting capital flows back to the United States. This shift could have implications for Kenya’s financial landscape, necessitating adjustments in economic planning.
Overall, the potential ripple effects of Trump’s energy expansion could play a significant role in shaping Kenya’s economic outlook in the months ahead.