Kenya’s central bank governor expect benefits from Trump’s ‘Drill, Baby, Drill’ cry

President Trump’s promise to expand U.S. energy production could have unexpected benefits for Kenya, according to the country’s central bank leadership.

Kenya’s Central Bank Governor Kamau Thugge explained that Trump’s emphasis on increasing domestic oil and gas production, which Trump colourfully described as “drill, baby, drill,” could help control prices in Kenya. Thugge explained: “If it results in lower fuel prices, then it’s also possible that that will contribute to lower inflation in the US and also lower global inflation. And that could actually be a positive for us.”

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This matters because while Kenya discovered oil in 2012, the country hasn’t yet started commercial production. Currently, Kenya must import all 5.5 million cubic meters of its petroleum needs. This makes the country particularly sensitive to global oil prices, which are already showing effects from Trump’s policy – Brent crude oil prices have dropped below $80 per barrel in London.

Kenya’s economy is particularly vulnerable to both local weather conditions and international commodity prices. While inflation has been decreasing, reaching a 14-year low of 2.7% last year, the central bank predicts it could rise to about 3.3% by March.

However, Thugge noted there could be some challenges ahead. The central bank will need to carefully watch how Trump’s policies affect inflation and the Federal Reserve’s responses. As Thugge pointed out: “That also has an impact on us because of the potential of capital now flowing back to the US as interest rates would remain more elevated than our earlier expectations.”