CBK Cuts Lending Rate to 9.25% to Support Kenya’s Economic Growth
The Central Bank of Kenya (CBK) has reduced the Central Bank Rate (CBR) by 25 basis points to 9.25%, a move expected to make borrowing cheaper and sustain the country’s ongoing economic recovery.
CBK Lowers Benchmark Rate
In a statement released on Wednesday, October 7, 2025, the Monetary Policy Committee (MPC) announced that the benchmark lending rate had been revised downward from 9.50% to 9.25%.
“The Monetary Policy Committee (MPC) decided to lower the Central Bank Rate (CBR) by 25 basis points to 9.25 per cent from 9.50 per cent,” the CBK said after its meeting.
The decision signals growing confidence in Kenya’s economic resilience and will reduce the cost of loans and mortgages, because commercial banks use the CBR (Central Bank Rate) as a reference point when setting lending rates.
Inflation Remains Within Target
The CBK noted that inflation remained stable at 4.6% in September, slightly up from 4.5% in August, and well within the government’s target range of 5 ± 2.5%.
Core inflation, which excludes volatile food and energy prices, dropped to 2.9% in September, mainly due to reduced prices of processed food such as maize flour.
Non-core inflation, however, rose to 9.6% in the same period, driven by higher prices of vegetables including tomatoes, onions, carrots, and cabbage.
“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,” CBK stated.
Economic Stability and Growth Outlook
CBK Governor Kamau Thugge expressed optimism that improved agricultural production and stable fuel prices would continue to support low inflation and economic stability.
The central bank attributed its positive outlook to favourable weather, a stable macroeconomic environment, low inflation, a resilient digital economy, and strong tourism performance.
Strengthening Monetary Policy Transmission
The CBK said it is working to ensure commercial banks align with the recent series of rate cuts by implementing the Risk-Based Credit Pricing (RBCP) model. The framework, set to become fully operational by March 2026, aims to improve the transmission of monetary policy decisions to lending rates while enhancing transparency in loan pricing.
The latest reduction marks the eighth consecutive rate cut, reflecting the CBK’s strategy to maintain accommodative monetary policy conditions that encourage credit growth and investment.
