The Monetary Policy Committee left CBR rate unchanged at 8.75% for the fourth consecutive meeting citing inflation still within the 2.5% -7.5% target range, a stable exchange rate and the need to support private sector credit growth which stood at 10.6% in September compared to 10.3% in August 2026. Fed raised rate by 25 bps a move which strengthened the dollar. With the US 10Y yield at around 5.35% (the highest level in 2 decades), we expect foreign investors to shift capital from equities into US treasuries. Sustained higher yield will suck out liquidity from the equities market (Milk shake theory). Kenya's inflation rose to 6.8% in September from 6.6% in August. If inflation moves toward the upper limit of 7.5% and remains above 7%, CBK is likely to begin hiking CBR rate (tightening). Higher inflation and investors are demanding for higher yield would drive outflows. Sustained foreign net selling between October and December is likely to give us a modest correction on NSE. #InvestWithEncap @EncapKenya