The Central Bank of Kenya (CBK) has lowered its benchmark lending rate by 25 basis points to 9.25 percent, from 9.50 percent, following a meeting of the Monetary Policy Committee (MPC) held on October 7, 2025.
The decision marks the eighth consecutive rate cut by the CBK as it seeks to stimulate lending to the private sector and support economic growth amid stable inflation and a resilient economy.
CBK Governor and MPC Chair Dr. Kamau Thugge said the Committee saw room for further easing of the monetary policy stance while maintaining price stability and a stable exchange rate.
“This will augment previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity, while ensuring inflationary expectations remain firmly anchored,” the statement said.
According to the MPC, Kenya’s overall inflation stood at 4.6 percent in September, remaining below the mid-point of the government’s 5 percent target.
Core inflation eased to 2.9 percent, driven mainly by lower food prices, while non-core inflation rose slightly due to higher vegetable prices.
“Non-core inflation increased to 9.6 percent in September from 9.2 percent in August, mainly driven by higher prices of vegetables, particularly tomatoes, carrots, onions, and cabbages.
“Overall inflation is expected to remain below the midpoint of the target range in the near term, supported by stable energy prices, and continued exchange rate stability.”
The economy recorded 5.0 percent growth in the second quarter of 2025, up from 4.6 percent in the same period last year, reflecting strong performance in agriculture, manufacturing, and services sectors. The CBK projects economic growth to rise to 5.2 percent in 2025 and 5.5 percent in 2026.
Commercial bank lending to the private sector has continued to improve, growing 5.0 percent in September, compared to 3.3 percent in August and negative growth at the start of the year. Average lending rates declined to 15.1 percent in September, reflecting easing credit conditions.
The MPC also noted that the Risk-Based Credit Pricing (RBCP) model, set to be fully implemented by March 2026, will enhance the transmission of monetary policy decisions to bank lending rates and improve loan pricing transparency.
The CBK’s foreign exchange reserves remain strong at USD 10.8 billion, equivalent to 4.72 months of import cover, providing a buffer against external shocks.
The MPC will meet again in December 2025 to review developments in the domestic and global economy.