The Central Bank of Kenya (CBK) has lowered the Central Bank Rate (CBR) by 25 basis points to 9.25 percent from 9.50 percent following a meeting of the Monetary Policy Committee (MPC) held on October 7, 2025.
CBK Governor Dr Kamau Thugge said the decision aims to further support private sector lending and stimulate economic activity, while maintaining stable inflation and exchange rates.
The Committee noted that Kenya’s overall inflation remained well within target at 4.6 percent in September 2025, compared to 4.5 percent in August. Core inflation eased to 2.9 percent, reflecting lower processed food prices, while non-core inflation rose slightly due to higher vegetable prices. The MPC expects inflation to remain below the midpoint of the 5±2.5 percent target range, supported by stable fuel prices and a steady exchange rate.
Economic performance also showed strong momentum, with real GDP growing by 5.0 percent in the second quarter of 2025, up from 4.6 percent a year earlier. Growth was driven by recovery in the industrial sector, stable agricultural output, and resilient performance in services such as transport, finance, and ICT. The economy is projected to expand by 5.2 percent in 2025 and 5.5 percent in 2026.
The CBK reported that the banking sector remains sound, with liquidity and capital adequacy ratios above regulatory requirements. The ratio of gross non-performing loans (NPLs) to gross loans improved to 17.1 percent in September from 17.6 percent in June, reflecting better performance in construction, real estate, tourism, and trade.
Foreign exchange reserves stood at USD 10.76 billion, equivalent to 4.72 months of import cover, providing a strong buffer against external shocks. The current account deficit widened slightly to 2.1 percent of GDP, attributed to increased imports of intermediate and capital goods, but remains well-financed by financial inflows.
The MPC highlighted that credit to the private sector grew by 5.0 percent in September 2025 compared to 3.3 percent in August, with lending rates easing to 15.1 percent from 17.2 percent in November 2024.
The Committee also reaffirmed the upcoming full implementation of the Risk-Based Credit Pricing (RBCP) model by March 2026, expected to enhance transparency and improve transmission of monetary policy decisions to commercial bank lending rates.
Dr Thugge noted that the MPC will continue to monitor global and domestic developments and stands ready to take further action if necessary. The next MPC meeting is scheduled for December 2025.
