At 0716 GMT, commercial banks quoted the shilling at 84.90/85.10 per dollar, barely changed from Tuesday's close of 84.95/85.15.

"There is a bit of end month demand (for dollars) and the tea inflows were not enough," said Chris Muiga, a senior trader at Kenya Commercial Bank.

"Lower inflation will probably boost expectations for further reductions in rates, which could encourage guys to take short positions against the shilling," Muiga added.

Annual inflation in the east Africa's largest economy is expected to fall further in September due to lower food and fuel prices compared to the same period last year. Inflation in August fell to 6.09 percent from 7.74 percent in July.

The shilling, which has been fairly stable this year, has gained 0.1 percent to date helped by a tight monetary stance adopted by the central bank, but is expected to slide towards 85.30 per dollar by the end of the week.

Policymakers have embarked on an easing cycle since July and have so far cut the benchmark central bank rate by a total 500 basis points in two meetings to 13 percent in an effort to jumpstart growth.