The Central Bank of Kenya (CBK) has decided to hold its base lending rate steady at 8.75 percent, citing stronger economic performance and stable macroeconomic conditions.

During its latest meeting, the Monetary Policy Committee (MPC), chaired by Governor Kamau Thugge, highlighted that the Kenyan economy expanded by 5.3 percent in the first quarter of 2026, up from 4.9 percent in the same period last year. This growth was broad-based, with notable gains in industry and services sectors.

Key highlights from the MPC statement include:

  • Monetary policy stance: The committee affirmed that maintaining the Central Bank Rate at 8.75 percent is appropriate to keep inflation within target and support exchange rate stability.
  • Economic growth outlook: The economy is projected to grow by 4.9 percent in 2026 and accelerate to 5.3 percent in 2027, driven by a resilient industrial sector, stable agriculture, and robust services.
  • Credit environment: Lending to the private sector rose by 10.2 percent in July, supported by declining commercial bank lending rates, which averaged 14.3 percent down from 17.2 percent in late 2024.
  • Banking sector health: The sector remains strong, with improved liquidity and capital adequacy. Non-performing loans ratio decreased to 14.6 percent in July from 17.6 percent the previous year.
  • Inflation trends: Inflation edged slightly up to 6.5 percent in July but remains within the target range. Food inflation stayed elevated due to rising prices of vegetables like potatoes and tomatoes.
  • External sector: Foreign exchange reserves stand at $15.25 billion, covering 6.3 months of imports. The current account deficit widened to 3 percent of GDP, mainly due to increased imports and lower remittances.
  • Global risks: The MPC noted global uncertainties including the Middle East conflict, elevated energy prices, and geopolitical tensions that could affect Kenya's economic outlook.
  • Business sentiment: Surveys indicate continued optimism fueled by macroeconomic stability, government support in agriculture, infrastructure investments, and digital innovation, despite concerns over global risks and energy costs.

The MPC emphasized it will keep monitoring inflation drivers, global developments, and oil prices, ready to adjust policy as needed. The committee’s next meeting is scheduled for October 2026.