- Decision
- Lower
- Rate change
- 25 bps
- central bank rate
- 8.75%
The Monetary Policy Committee of the Central Bank of Kenya cut the Central Bank Rate by 25 bp to 8.75 percent, citing headline inflation at 4.4 percent in January—below the 5 ± 2.5 percent target band—and a need to further support credit expansion and growth while keeping inflation expectations and the exchange rate anchored. Including this move, the CBR has been reduced by a cumulative 200 bp since February 2025. To reinforce transmission, the Committee narrowed the policy corridor to ±50 bp around the CBR and lowered the Discount Window rate to the corridor’s 50 bp upper bound. Core inflation measured 2.2 percent, real GDP grew 4.9 percent in Q3 2025 and is projected to rise to 5.5 percent in 2026, while private-sector credit growth accelerated to 6.4 percent and average lending rates eased to 14.8 percent in January. Externally, the 2025 current-account deficit is estimated at 2.4 percent of GDP and reserves stand at USD 12.46 bn (5.37 months of import cover). The MPC observed resilient global growth of 3.3 percent alongside moderating global inflation but flagged weak demand and heightened geopolitical tensions as key risks, and it reiterated its readiness to act at the April 2026 meeting.
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.