The Central Bank of Kenya (CBK) has reduced its benchmark lending rate to 9.25%, down from 9.50%, in its latest Monetary Policy Committee (MPC) meeting. This marks the eighth consecutive rate cut, a move the bank says is intended to sustain the momentum of domestic lending and stimulate private sector activity amid stable inflationary conditions.
According to the CBK’s statement, the committee determined that “there remains scope for further easing of monetary policy” as consumer inflation continues to fall comfortably within the target band of 2.5% to 7.5%. Kenya’s headline inflation stood at 4.6% in September 2025, slightly higher than 4.5% in August, yet well within the preferred range, signalling effective monetary management and stable price expectations.
The policy adjustment, while moderate, underscores the CBK’s balancing act between supporting growth and maintaining macroeconomic stability. By keeping inflation expectations anchored, the bank seeks to reinforce investor confidence while encouraging commercial banks to expand credit to the productive sectors of the economy. The CBK emphasised that it would continue to “monitor global and domestic developments” and stands ready to adjust its stance as conditions evolve.
Kenya’s economic growth forecast for 2026 has been revised marginally upwards to 5.5% from 5.4%, while the 2025 projection remains unchanged at 5.2%. The bank attributed this to the continued recovery of industry and sustained resilience in key service and agricultural sectors. The statement reaffirmed optimism about the trajectory of the Kenyan economy, which has demonstrated notable resilience in the face of external shocks such as fluctuating commodity prices and global financial tightening.
In addition, the CBK now anticipates the current account deficit for 2025 to widen slightly to 1.7% of GDP, compared with the earlier forecast of 1.5%. The revision reflects Kenya’s ongoing efforts to manage its external financing pressures, particularly amid global uncertainty and a challenging debt environment. The government’s continued use of instruments such as bond buybacks and debt restructuring has been instrumental in mitigating refinancing risks.
This policy action comes at a time when East Africa’s largest economy remains committed to maintaining fiscal discipline while supporting real sector growth. Kenya’s monetary easing stands in contrast to the tightening stances in several advanced economies, underscoring the region’s differentiated macroeconomic context. The CBK’s strategy reflects a broader African shift towards policies that prioritise inclusive growth, economic resilience, and the strengthening of domestic economic ecosystems over dependence on external monetary signals.
While Kenya’s economy continues to navigate the complexities of debt sustainability and global market volatility, its approach demonstrates a maturing financial governance framework—one that aligns with Africa’s broader ambition to chart its own path of development based on regional priorities and socio-economic realities rather than externally imposed models.
As the CBK continues its accommodative stance, attention now turns to how effectively commercial banks will transmit the lower policy rate into affordable credit for small and medium-sized enterprises (SMEs), which remain at the heart of Kenya’s economic dynamism. The sustained stability in inflation and targeted policy coordination signal a measured optimism for Kenya’s economic outlook through 2026.
