Published on: 2026-01-23
USD/KES volatility and gold's shilling price are
back in focus ahead of the Central Bank of Kenya's (CBK) 10 February MPC
meeting, as global rate expectations keep shifting in quick bursts. EBC
Financial Group (EBC) noted that the International Monetary Fund's (IMF) latest
World Economic Outlook Update strengthens the global backdrop by lifting
projected world growth to 3.3% in 2026 and 3.2% in 2027.
The IMF also expects global headline inflation to cool from 4.1% in 2025 to 3.8% in 2026 and 3.4% in 2027, while warning that US inflation is likely to return to target more gradually than in other large economies. Prices for energy commodities are expected to fall by about 7% in 2026 compared with a 3.7% decline projected for fuel commodities in the IMF's October 2025 WEO, a shift that can quickly feed through to inflation expectations, rate pricing and foreign exchange (FX). The IMF warned that risks remain tilted to the downside, including a rethink of technology expectations, renewed trade tensions, and geopolitical flare-ups that can disrupt markets and commodity pricing.
David Barrett, Chief Executive Officer at EBC Financial Group (UK) Ltd, said: "We welcome the IMF upgrade, but we are telling traders not to relax their discipline, because the sharpest moves still come when inflation surprises, rate pricing shifts, or risk sentiment turns suddenly. Remaining educated on what causes these movements and exercising prudent risk management measures are essential to sound trading strategies."
Kenya's IMF profile shows projected real GDP growth of 4.9% in 2026 and projected consumer prices of 5.2%, a combination that keeps both growth and inflation in view for FX traders. Kenya National Bureau of Statistics (KNBS) reported an annual inflation of 4.5% in December 2025, which helps explain why the shilling stabilises with the backdrop of uncertainty dominating global risks. The CBK has set its next Monetary Policy Committee (MPC) meeting for 10 February 2026, which is next scheduled decision point where policy rates and forward guidance can be updated. In practice, USD/KES can remain range-bound, then reprice quickly if US rate expectations shift and the dollar tightens financial conditions. In Kenya, dollar strength tends to show up through the import channel first. Global rate repricing matters despite steady local inflation prints.
The IMF's update shows a clear split between regions. Advanced economies projected to grow 1.8% in 2026 while emerging market and developing economies are projected to grow 4.2% in 2026. This kind of divergence can drive capital flows and push FX trends harder than the global average number, particularly when investors swing between carry trades and safety. When growth momentum is concentrated in a few regions, markets often reward the "winners" quickly, then unwind crowded positions just as fast when the dollar firms.
The IMF expects global headline inflation to keep falling, but it also flags a slower return to target inflation in the United States than in other large economies. For FX markets, that matters because US rates and US real yields often anchor the direction of the dollar, especially when growth elsewhere is steady rather than booming. Even small shifts in expected Fed cuts can ripple through funding costs globally causing sharp movements of emerging-market FX against seemingly "incremental" US data.
Barrett added, "In this cycle, the dollar still trades the Fed first because it reacts most to what markets expect the US central bank to do next on rates, and the rest of the world second, so it pays to watch the rate path, not the noise around it."
The IMF expects energy commodity prices to fall by about 7% in 2026, compared with a 3.7% decline projected previously, which can shift inflation expectations and reprice rate paths quickly. In precious metals, the same macro chain tends to matter most day to day: the dollar, real yields, and event risk that pushes investors into safe havens. Lower energy costs can ease inflation pressure at the margin, but commodities remain headline-sensitive, and any geopolitical disruption can flip the inflation story and the rates market in a matter of sessions.
EBC provides access to forex and commodity CFD markets, including precious metals such as gold (XAU) and silver (XAG). For clients who want to build a clearer process around macro-driven volatility, EBC's education hub includes a practical CFD starter guide and a gold-focused explainer designed for risk-aware trading. EBC also publishes market education on commodity trading and the key drivers behind gold and silver price action.
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