The Monetary Policy Committee (MPC) of the Central Bank of Kenya has lowered the Central Bank Rate (CBR) by 25 basis points to 8.75 percent, down from 9.00 percent, following its meeting on February 10, 2026.
Why the Cut Matters
The MPC said the move reflects scope for further easing of monetary policy to stimulate private sector lending and support economic activity, while keeping inflation expectations anchored and the exchange rate stable.
Kenya’s inflation eased to 4.4 percent in January 2026, below the midpoint of the target range of 5±2.5 percent. Stable food and energy prices, alongside exchange rate stability, are expected to keep inflation contained in the near term.
Kenya MPC Meeting: Stability Expected Amid Inflation Pressures
Economic Context
- Global Growth: Resilient at 3.3% in 2025, with steady prospects for 2026, driven by strong U.S. and Euro area performance. Risks remain from geopolitical tensions and trade uncertainties.
- Domestic Growth: Kenya’s GDP grew 4.9% in Q3 2025, with full‑year growth estimated at 5.0%. Projections point to 5.5% in 2026 and 5.6% in 2027, supported by services, industry recovery, and stable agriculture.
- Banking Sector: Non‑performing loans fell to 15.5% in January 2026, down from 16.7% in October 2025. Private sector credit growth improved to 6.4% year‑on‑year, reflecting lower lending rates.
Strengthening Policy Transmission
The MPC also approved narrowing the interest rate corridor around the CBR from ±75 basis points to ±50 basis points. The discount window rate was adjusted to 50 basis points above the CBR, aligning with the new corridor. These changes aim to improve monetary policy transmission and enhance transparency in loan pricing.
Looking Ahead
The Committee emphasized it will continue monitoring global and domestic developments and stands ready to act further if needed. The next MPC meeting is scheduled for April 2026.
