- Decision
- Lower
- Rate change
- 25 bps
- central bank rate
- 9.5%
Kenya’s Monetary Policy Committee cut the Central Bank Rate by 25 bp to 9.50 % at its 12 August 2025 meeting, citing sub-mid-target inflation, firm exchange-rate conditions and scope to further stimulate bank lending and economic activity amid persistent global uncertainties. The decision extends a cumulative 175 bp easing cycle since February 2025, when the CBR stood at 11.25 %. The committee offered no new operational changes but highlighted forthcoming risk-based credit-pricing reforms to strengthen monetary transmission. Headline inflation in July edged up to 4.1 % from 3.8 % in June yet stayed below the 5 ± 2.5 % target midpoint, with core inflation at 3.1 %; GDP grew 4.9 % y/y in Q1 and is projected to accelerate to 5.2 % in 2025 and 5.4 % in 2026, supported by agriculture, services and recovering industry, while private-sector credit growth improved to 3.3 % in July as lending rates eased to 15.2 %. The current-account deficit narrowed to 1.6 % of GDP in the year to June, reserves remain adequate at USD 10.96 bn (4.8 months import cover), and surveys show business and agricultural optimism despite concerns over demand and geopolitical risks. The MPC reiterated it will monitor conditions and stands ready to act, with its next review scheduled for October 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.