CBK trims benchmark lending rate to 9.50%; signals more easing ahead

Nairobi

The Central Bank of Kenya (CBK) has lowered its benchmark lending rate to 9.50 per cent, down from 9.75 per cent, marking the seventh consecutive rate cut since August 2024  .

Governor Kamau Thugge, speaking after the Monetary Policy Committee (MPC) meeting on August 12, 2025, emphasised that the decision reflects Kenya’s improving inflation outlook and provides room for further monetary easing  .

Inflation in July 2025 edged up slightly to 4.1 per cent from 3.8 per cent in June, remaining firmly within the central bank’s target band of 2.5–7.5 per cent  .

To support economic activity, the CBK has left its economic growth projections unchanged—5.2 per cent for 2025 and 5.4 per cent for 2026—alongside maintaining its current-account deficit forecast at 1.5 per cent of GDP  .

While inflationary pressures have remained contained, the bank flagged ongoing vulnerabilities in public finances, citing high debt servicing obligations and underperforming revenue collection  .

Governor Thugge and the MPC also noted the need for commercial banks to translate the rate cut into lower borrowing costs, encouraging expanded lending to households and businesses  . Looking ahead, the CBK remains open to further cuts should inflation stay within target

Why this matters to Kenyans:

• Cheaper loans: Year-to-date reductions make mortgages, business loans, and personal credit more affordable.

• Stimulated economic growth: The move aims to unlock private-sector investment and bolster consumer spending.

• Policy clarity amid fiscal strain: The unchanged growth and deficit forecasts underscore ongoing constraints in government finances.

• Prudence underlines the policy path: While rate cuts continue, CBK urges fiscal discipline and structural reforms to ensure long-term stability.