Kenya central bank extends easing cycle with eighth straight rate cut
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Kenya’s central bank lowered its benchmark lending rate by 25 basis points to 9.25%, marking an eighth consecutive cut since August 2024 as inflation remains comfortably within the official target range. The Monetary Policy Committee (MPC) said the decision aimed to reinforce earlier measures to stimulate bank lending to the private sector, support economic activity and keep inflation expectations anchored.
Annual inflation inched up to 4.6% in September from 4.5% in August, remaining within the 2.5%–7.5% target band, and the MPC expects it to stay below the 5% midpoint over the coming months. The central bank estimated the current account deficit at 2.1% of GDP in the 12 months to August 2025 and projected it at 1.7% of GDP in 2025 and 1.8% in 2026, with external inflows anticipated to more than fully cover the gap and generate a balance-of-payments surplus and foreign reserve accumulation of USD 674 million in 2025 and USD 229 million in 2026.
The Central Bank of Kenya kept its growth outlook unchanged, forecasting real GDP expansion of 5.2% in 2025 and 5.5% in 2026, underpinned by resilient services, solid agricultural performance and a gradual industrial recovery.
Analysts said the eighth straight rate cut highlights a growth-supportive policy stance under conditions of contained inflation and a relatively stable shilling. They cautioned, however, that a prolonged easing cycle could weigh on returns for domestic fixed-income investors and will require close monitoring of public debt dynamics and external vulnerabilities.
