- Decision
- Lower
- Rate change
- 50 bps
- central bank rate
- 10.75%
The Monetary Policy Committee of the Central Bank of Kenya on 5 February 2025 cut the Central Bank Rate by 50 bp to 10.75 percent and lowered the cash-reserve ratio to 3.25 percent, judging that softer inflation and a slowing economy justify further easing while safeguarding exchange-rate stability. The CRR reduction will inject liquidity to push funding and lending rates lower, with supervisors already checking banks’ adherence to the risk-based pricing framework. Headline inflation edged up to 3.3 percent in January but remains below the 5 ± 2.5 percent target midpoint and is expected to stay subdued on low core readings, easing energy costs and a firm shilling; real GDP growth slowed to an estimated 4.6 percent in 2024 but is projected to rebound in 2025 amid firmer services, agriculture and credit. The 2024 current-account deficit narrowed to 3.7 percent of GDP, and foreign-exchange reserves rose to about USD 9.1 billion (4.6 months of import cover), providing a buffer against external shocks. Citing a gradually improving global growth outlook alongside lingering geopolitical and trade uncertainties and sticky core inflation abroad, the committee said it will continue to monitor conditions and stands ready to act again, with the next review due in April 2025.
Rate evolution
From June 2025 to February 2026, the Central Bank of Kenya cut the Central Bank Rate by a cumulative 125 basis points to 8.75 percent from 10.00 percent in an uninterrupted easing cycle. The Monetary Policy Committee repeatedly judged there was scope to ease because inflation remained below the midpoint of the 5±2.5 percent target range and was expected to stay there in the near term, allowing it to support lending and economic activity while keeping inflation expectations firmly anchored and the exchange rate stable. Decisions were also backed by resilient growth, falling lending rates, a steady recovery in private sector credit, adequate foreign exchange reserves and a stable banking sector, even as surveys continued to cite subdued consumer demand and high business costs. The Committee cut the CBR to 9.00 percent in December and 8.75 percent in February as inflation stayed contained and credit strengthened, while flagging food-price pressures, adverse weather, trade-policy uncertainty and geopolitical tensions.
On August 11, 2026, the Committee held the CBR at 8.75 percent, judging the stance appropriate to keep inflation expectations anchored within the target range and the exchange rate stable. Overall inflation was broadly stable at 6.5 percent in July and was expected to remain within the target range in the near term, while the Committee noted stronger economic growth and private sector credit but said it would monitor global oil prices, potential second-round effects on inflation and other global and domestic developments.