Kenya Joins Egypt and South Africa in Cutting Interest Rates to Curb Inflation and Spur Growth

Nairobi, Kenya — Kenya has joined Egypt and South Africa in implementing interest rate cuts aimed at curbing inflation, addressing unemployment, and stimulating economic growth, according to a May 23 report by Nairametrics, a leading African financial analysis publication.

The report highlights that several African central banks revised their monetary policy rates in early 2025, reflecting a strategic pivot in response to ongoing economic pressures. For Kenya, the decision to lower borrowing costs signals a shift toward more accommodative monetary policy as the country grapples with persistent inflation and sluggish job creation.

“This easing of financial conditions is designed to boost domestic investment and consumption, and ultimately, to accelerate economic recovery,” the report stated.

The approach marks a divergence from countries such as Nigeria and Angola, which have opted to maintain their current interest rates while closely monitoring macroeconomic indicators. These nations have adopted a wait-and-see stance, suggesting that future rate cuts may be contingent upon clearer signs of economic stability.

Economists say the contrasting strategies across the continent highlight the complexity of balancing inflation control with the need for economic stimulus. Kenya’s move aligns with the growing consensus among some African policymakers that proactive measures are necessary to prevent economic stagnation amid global financial uncertainty.

Kenya’s Central Bank has not only cited inflationary pressure as a concern, but also emphasized the need to support productive sectors, including agriculture and small-to-medium enterprises, which have been particularly vulnerable in recent quarters.

The Nairametrics report further suggests that the effectiveness of these rate cuts will depend heavily on how quickly the stimulus translates into increased lending, job creation, and improved consumer confidence.

With economic recovery a top priority across the continent, Kenya’s decision places it among a cohort of African nations willing to take bold fiscal and monetary actions to secure growth in 2025 and beyond.