Kenya Central Bank Cuts Rate to 9.25% in Eighth Straight Easing Move
TLDR
- The Central Bank of Kenya (CBK) lowered its benchmark lending rate by 25 basis points to 9.25%, marking its eighth consecutive cut
- The Monetary Policy Committee (MPC) said the decision reflects room for further easing, given stable inflation expectations and moderate price pressures
- The CBK expects GDP growth of 5.2% in 2025 and 5.5% in 2026, citing continued resilience in services and agriculture and a gradual recovery in industry
The Central Bank of Kenya (CBK) lowered its benchmark lending rate by 25 basis points to 9.25%, marking its eighth consecutive cut as policymakers continue efforts to boost credit growth and sustain economic momentum.
The Monetary Policy Committee (MPC) said the decision reflects room for further easing, given stable inflation expectations and moderate price pressures. Annual inflation rose slightly to 4.6% in September from 4.5% a month earlier, remaining well within the 2.5%–7.5% target range.
The CBK expects GDP growth of 5.2% in 2025 and 5.5% in 2026, citing continued resilience in services and agriculture and a gradual recovery in industry. The current account deficit is forecast at 1.7% of GDP this year, compared with an earlier projection of 1.5%.
Despite a high debt load, the CBK said Kenya remains proactive in managing refinancing risks through bond buybacks and other liability management measures.
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Key Takeaways
Kenya’s latest rate cut underscores the central bank’s shift toward growth-supportive monetary policy amid easing inflation pressures and relative currency stability. The move brings the policy rate to its lowest level since early 2021 and signals confidence that inflation will remain anchored despite fiscal constraints. With inflation contained and external balances improving, the CBK appears focused on stimulating private-sector lending to drive domestic investment and job creation. However, continued easing raises questions about Kenya’s debt dynamics, given persistent refinancing needs and high interest expenditures. The central bank’s balancing act — between supporting growth and maintaining investor confidence in its debt program — will define the economic outlook heading into 2026. The CBK’s dovish tone, combined with fiscal reforms and improving agricultural output, positions Kenya among the few African economies pursuing measured monetary expansion while keeping inflation within target.
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