The Central Bank of Kenya (CBK) has embarked on an ambitious project to integrate artificial intelligence (AI) across its operations, identifying nearly 300 potential use cases spanning 14 departments. This initiative aims to enhance the bank's capabilities in inflation forecasting, economic nowcasting, and internal process efficiency. According to the CBK's Head of Research, the implementation will focus on four tiers of AI, offering varying levels of automation, analytical depth, and autonomy.
A key aspect of this strategy involves leveraging machine-learning models to complement traditional inflation-forecasting tools. The bank acknowledges that volatile economic conditions, such as the recent energy crisis that began in February 2026, have strained conventional relationships between economic variables. By incorporating AI-driven insights, the CBK seeks to improve the accuracy of its inflation forecasts and better navigate complex economic landscapes.
The CBK is also exploring the potential of nowcasting to fill the three-month lag in quarterly GDP releases. By analyzing high-frequency data such as satellite night-light imagery, electricity use, vegetation indices, and mobile-payment volumes, the bank aims to gain a more timely understanding of economic activity. With mobile-payment values estimated at roughly 2.5 times GDP, daily or weekly transaction data could serve as a proxy for short-term economic activity.
In addition to nowcasting, the CBK is investigating the use of web-scraping to gather more granular, intra-month signals of consumer-price pressures. This involves collecting online supermarket prices to supplement the 330-item consumer price basket used by the Kenya National Bureau of Statistics. By integrating these alternative data sources, the bank hopes to enhance its understanding of consumer-price dynamics.
The CBK has already begun testing an AI-driven chatbot in the Financial Markets Department, while evaluating the potential of agentic AI for payments. This pilot project aims to assess the efficiency gains and governance risks associated with AI adoption. The bank's AI rollout is guided by a case-by-case risk assessment, emphasizing explainability, human oversight, and data-privacy safeguards.
Human judgement will remain central to the CBK's decision-making processes, with economists interpreting AI-generated outputs and retaining responsibility for policy decisions. The bank recognizes the importance of balancing AI-driven insights with human expertise, ensuring that AI adoption enhances rather than replaces human judgement.
As the CBK continues to implement its AI strategy, it will focus on managing risks and ensuring the integrity of its operations. With a cautious approach to AI adoption, the bank aims to harness the benefits of AI while maintaining the trust and confidence of stakeholders. The successful integration of AI is expected to enhance the CBK's analytical capabilities, ultimately contributing to more informed policy decisions.
Key points
- The Central Bank of Kenya is piloting nearly 300 AI use cases to improve inflation modelling and real-time economic tracking.
- The bank's AI strategy involves leveraging machine-learning models to complement traditional inflation-forecasting tools.
- Human judgement will remain central to the CBK's decision-making processes, with economists interpreting AI-generated outputs.
