The Kenya Bankers Association (KBA) has asked the Central Bank of Kenya (CBK) to keep the Central Bank Rate (CBR) at 8.75% when its Monetary Policy Committee (MPC) meets on Wednesday, 7 October 2026.
In Research Note No. 5 of 2026, published on 1 October, the association’s Centre for Research on Financial Markets and Policy said inflation sits inside the target range and the shilling has held steady.
“With inflation within the target range, and exchange rate stability sustained, sustaining the current stance of monetary policy, to anchor the recovery in private sector credit and economic activity is appropriate,” the note said.
What KBA wants the MPC to weigh
The note lists four factors. Headline inflation is edging toward the upper limit of the target, driven mainly by supply factors, with little pressure from demand.
Economic growth has held up, though external developments and projected El Niño rains threaten it. Favourable interest differentials and responsive yields are lifting credit expansion. A stable exchange rate provides a buffer, but prolonged oil price pressure raises risks in the external sector.
Inflation climbs for a third month
The Kenya National Bureau of Statistics reported that inflation rose to 6.8% in September from 6.6% in August. The CBK’s target range is 2.5% to 7.5%. Inflation stood at 6.4% in June and 6.5% in July. Transport inflation held at 15.6%, food and non alcoholic beverages rose to 9.5% from 9.0% in July, and housing, water, electricity, gas and other fuels stayed at 3.2%.
The Middle East conflict, which the research note links to the US, Israel and Iran, has disrupted global oil supply and lifted domestic fuel and transport costs. In Nairobi, the Energy and Petroleum Regulatory Authority holds super petrol at Sh214.03 a litre, diesel at Sh217.86 and kerosene at Sh191.38 until 14 October. Diesel fell by Sh5 from Sh222.86 in August, as Khusoko reported, while the government’s stabilisation measures kept petrol and kerosene flat.
Where the MPC stands
The committee has held the CBR at 8.75% at its April, June and August meetings, after cutting it by 25 basis points in February.
At the 11 August meeting, CBK Governor Kamau Thugge said the current stance remains appropriate “to ensure that inflation expectations remain anchored within the target range.” The committee also pointed to rising private sector credit growth and falling lending rates, which gave it room to assess the effect of earlier cuts.
Cytonn Investments expects inflation to stay above the 5% midpoint of the target range in the short to medium term. It cites food price swings from weather disruptions, higher fuel and electricity costs, and exchange rate pass through to imported goods.
It also expects the CBK’s “prudent monetary policy stance and relative exchange rate stability” to keep inflation within the range. Cytonn expects the MPC to stay cautious as it tracks the Middle East conflict and global energy prices.
The decision ahead
The MPC must weigh rising inflation against the risk of slower credit growth and weaker economic activity. KBA argues the case for holding the rate at 8.75% rests on inflation within the target and a steady shilling. The committee announces its decision on 7 October.
