Further CBK Policy Rate Cut Possible in 2025 if Inflation and Shilling Remain Stable
After the Central Bank of Kenya's policy rate cut to 10.0% in April, financial markets anticipate another potential 50 basis points reduction later in 2025. This further monetary easing is expected if domestic inflation stays low and the Kenyan shilling holds firm, supporting continued economic stimulation.
Following the Central Bank of Kenya's (CBK) decisive move to cut its key policy rate to 10.0% in early April, financial market participants and economists are now keenly anticipating the possibility of another downward adjustment to the rate later in 2025. Informed market analysts suggest that a further reduction, potentially around 50 basis points, could be implemented by the Monetary Policy Committee. However, such a move is understood to be contingent upon the continuation of favorable macroeconomic conditions, specifically, domestic inflation remaining consistently subdued within the CBK's target range and the Kenyan shilling maintaining its current stability against major international currencies. The Central Bank's recent series of rate cuts clearly indicates a proactive and accommodative monetary policy stance aimed at stimulating credit uptake and bolstering economic growth. Should these positive economic indicators persist, it would provide the CBK with the necessary policy space to enact further easing measures, which could provide an additional fillip to Kenya's overall economic momentum throughout the remainder of the year by making borrowing cheaper for businesses and consumers alike.