The Central Bank of Kenya (CBK) has lowered its benchmark lending rate by 25 basis points to 9 per cent, offering relief to borrowers and homeowners across the country.
The decision, made during the Monetary Policy Committee (MPC) meeting on December 9, 2025, is expected to reduce borrowing costs at commercial banks, which use the Central Bank Rate (CBR) as a guide for setting their loan and mortgage rates.
''The Monetary Policy Committee (MPC) decided to lower the Central Bank Rate (CBR) by 25 basis points to 9.00 per cent from 9.25 per cent, during its meeting held on December 9, 2025,'' CBK announced.
The MPC highlighted that the rate cut reflects continued resilience in the global economy, which is projected to grow by 3.2 per cent in 2025, driven largely by robust consumer and business spending, especially in the United States. Despite this, global growth is expected to slow slightly to 3.1 per cent in 2026, mainly due to higher trade tariffs.
This is the ninth consecutive rate reduction by CBK, aligning with a global trend where central banks in major economies have gradually eased monetary policies in response to varying inflation and growth conditions.
The bank also noted that international oil prices have softened due to increased production and weaker global demand, though volatility persists amid ongoing uncertainties.
Domestically, lower food prices have contributed to easing overall inflationary pressures. Kenya’s overall inflation declined to 4.5 per cent in November from 4.6 per cent in October, staying below the mid-point of the target range of 5±2.5 per cent.
Core inflation also fell to 2.3 per cent from 2.7 per cent, mainly due to lower costs of processed food items such as maize flour and sugar. Meanwhile, non-core inflation rose to 10.1 per cent from 9.9 per cent, driven by higher prices for vegetables, including tomatoes, onions, and cabbage.
Looking ahead, inflation is expected to remain under control in the near term, supported by stable energy prices, a steady exchange rate, and continued declines in processed food prices.
The Kenyan economy has demonstrated resilience, with real GDP growth averaging 4.9 per cent in the first half of 2025.
Growth is projected to accelerate to 5.2 per cent this year and 5.5 per cent in 2026, supported by strong performance in services, agriculture, and an ongoing recovery in the industrial sector.
However, the MPC cautioned that factors such as adverse weather, trade uncertainties, and geopolitical tensions could affect the economic outlook.
The MPC is scheduled to meet again in February 2026 to review these trends and assess the impact of current policies on Kenya’s economic performance.
