Kenya Central Bank Extends Easing Cycle With Eighth Consecutive Rate Cut
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Kenya’s central bank lowered its benchmark lending rate by 25 basis points to 9.25%, marking its eighth consecutive cut since August 2024 as inflation remains well within target. The Monetary Policy Committee (MPC) said the move was intended to strengthen earlier measures to boost bank lending to the private sector, support economic activity, and keep inflation expectations anchored.
Annual inflation edged up to 4.6% in September from 4.5% in August, remaining inside the 2.5%–7.5% target band, and the MPC projects it will stay below the 5% midpoint in the coming months. The current account deficit was estimated at 2.1% of GDP in the 12 months to August 2025 and is projected at 1.7% of GDP in 2025 and 1.8% in 2026, with inflows expected to more than fully finance the gap and generate a balance-of-payments surplus and reserve build-up of USD 674 million in 2025 and USD 229 million in 2026. The CBK maintained its growth outlook, projecting real GDP expansion of 5.2% in 2025 and 5.5% in 2026, driven by resilient services, agriculture, and a gradual industrial recovery.
Analysts said the eighth straight cut underscores a growth-supportive stance under contained inflation and a relatively stable shilling, though they noted that prolonged easing could weigh on returns for local fixed-income investors and will require careful monitoring of debt dynamics and external risks.
