NAIROBI, Kenya — The Central Bank of Kenya (CBK) has lowered the Central Bank Rate (CBR) by 25 basis points to 9pc, offering fresh relief to borrowers as commercial banks prepare to adjust lending rates downward.
The Monetary Policy Committee (MPC) made the decision during its meeting held on December 9, 2025, marking the ninth consecutive rate cut since early 2024.
In a statement, the regulator said the move was informed by a stable inflation outlook, easing global pressures, and resilient domestic growth. “The Monetary Policy Committee decided to lower the Central Bank Rate (CBR) by 25 basis points to 9.00pc from 9.25pc,” CBK announced.
The decision is expected to lower the cost of loans and mortgages, given that banks price their interest rates using the CBR as a benchmark.
Analysts said the cut signals confidence in the country’s economic fundamentals heading into 2026, particularly after months of tight financial conditions that had squeezed households and businesses.
The MPC noted that global economic growth has remained resilient, projected at 3.2pc in 2025, largely supported by robust consumer and business spending in the United States.
However, global growth is expected to slow to 3.1pc in 2026 due to rising trade tariffs and tightening geopolitical uncertainties.
Central banks in major economies have gradually eased monetary policy in recent months, creating a favourable backdrop for Kenya’s policy stance. CBK also highlighted easing international oil prices, driven by increased production and subdued demand, though it cautioned that geopolitical risks may trigger volatility.
Global food inflation has declined as prices for cereals, sugar, and edible oils continue to fall, easing pressure on net-importing countries such as Kenya.
Kenya’s overall inflation dropped to 4.5pc in November from 4.6pc in October, remaining below the 5pc midpoint of the target band of 5±2.5pc. Core inflation fell to 2.3pc, buoyed by lower prices of processed foods including maize flour and sugar.
CBK attributed the decline to improved supply chains, steady energy costs, and easing global commodity prices.
Non-core inflation, however, rose to 10.1pc from 9.9pc the previous month, driven by higher vegetable prices such as tomatoes, onions, and cabbages. The MPC said this spike was seasonal and expected to stabilise as supply improves.
Despite the mixed inflation dynamics, the committee expects overall inflation to remain below the midpoint of the target range in the short term, supported by exchange-rate stability and declining fuel and food-related price pressures.
Kenya’s economy expanded by an average of 4.9pc in the first half of 2025, reflecting resilience in key service sectors, improved agricultural performance, and a gradual recovery in industry. The MPC projects growth to rise to 5.2pc in 2025 and 5.5pc in 2026.
However, the committee highlighted risks that could affect the outlook, including adverse weather patterns linked to climate variability, uncertain global trade conditions, and geopolitical tensions.
The MPC is expected to meet again in February 2026 to assess new data and determine whether further adjustments to the base rate are necessary.
