CBK cuts lending rate to 9.5 per cent in seventh straight easing move
This marks the seventh consecutive rate cut from the historic peak of 13.0 per cent, as the regulator reaffirms its commitment to boosting economic activity.
The Central Bank of Kenya (CBK) has trimmed its benchmark lending rate following the August Monetary Policy Committee meeting.
On Tuesday, the Committee announced its decision to cut the Central Bank Rate by 25 basis points to 9.5 per cent from 9.75 per cent.
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This marks the seventh consecutive rate cut from the historic peak of 13.0 per cent, as the regulator reaffirms its commitment to boosting economic activity.
During the deliberations, the committee noted significant improvements in the country’s fiscal and economic conditions.
“Having considered these developments, the Committee therefore concluded that there was scope for a further easing of the monetary policy stance to augment the previous policy actions,” the committee said in a statement.
It adds that the move is aimed at stimulating lending by banks to the private sector and supporting economic activity.
This while ensuring inflationary expectations remain firmly anchored, and the exchange rate remains stable.
Notably, the committee exhibited growth in the economy, saying the recently released GDP data for the first quarter of 2025 showed continued resilience of the Kenyan economy, with real GDP growing by 4.9 per cent.
“This reflected robust performance of agriculture, and recovery in industrial activity, particularly construction.”
Nevertheless, it notes that the leading indicators of economic activity point to improved performance in the second quarter of 2025, with the growth of the economy expected to pick up in 2025 and 2026, with real GDP growth projected at 5.2 per cent and 5.4 per cent, respectively.
This will be supported by the continued resilience of key service sectors, agriculture and the recovery of the industrial sector.
However, the outlook is subject to risks, including trade policy uncertainties and geopolitical tensions.
On the inflation front, the apex bank says Kenya’s overall inflation stood at 4.1 per cent in July 2025 compared to 3.8 per cent in June, and remained below the mid-point of the target range of 5±2.5 per cent.
Notably, core inflation increased to 3.1 per cent in July from 3.0 per cent in June, mainly on account of higher prices of processed food items, particularly of sugar and maize flour.
Non-core inflation rose to 7.2 per cent in July from 6.2 per cent in June, mainly reflecting an increase in energy prices.
Backing its move for the slash, the committee expects the overall inflation to remain below the midpoint of the target range in the near term, supported by lower food prices, stability in energy prices, and continued exchange rate stability.
The Committee will meet again in October 2025.
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