Banks Urge CBK to Hold Rates at 8.75% Amid Rising Global Risks

By Benadeta Mwaura - Reporter

Kenya, April 8, 2026 - Kenya’s banking sector is calling on the Central Bank of Kenya (CBK) to maintain its benchmark lending rate at 8.75 percent, citing growing global uncertainties that could destabilise the economy if policy easing continues.

The appeal comes at a critical moment for monetary policy, as the regulator weighs the need to support economic growth against rising external risks linked to global market volatility and geopolitical tensions.

The request to hold rates steady follows a series of policy moves by CBK in late 2025, when the central bank reduced interest rates to stimulate lending and support economic recovery.

At the time, easing inflationary pressure and relative stability in the Kenyan shilling gave policymakers room to loosen monetary conditions.

However, that window is now narrowing.

With global uncertainty rising, driven in part by ongoing tensions affecting oil markets and trade flows, banks are warning that further rate cuts could expose the economy to new vulnerabilities.

Commercial lenders argue that holding the rate at 8.75 percent would provide a stable anchor in an increasingly unpredictable environment.

Global risks are beginning to filter into the local economy through multiple channels.

Oil price volatility is pushing up import costs, exchange rate pressures are resurfacing, external financing conditions are tightening.

In such a setting, banks believe a steady policy stance would help manage inflation expectations and protect the currency from excessive volatility.

The CBK now faces a familiar policy dilemma.

Lower interest rates typically encourage borrowing, investment and consumption, key drivers of economic growth. But they can also weaken a country’s currency and fuel inflation, especially when external shocks are present.

Holding rates steady, on the other hand, may limit credit expansion but offers greater macroeconomic stability.

For Kenya, this balancing act is becoming more delicate.

What makes this moment particularly complex is the global backdrop.

Financial markets remain sensitive to geopolitical developments, especially those affecting energy supply chains. Rising oil prices have historically translated into higher inflation for import-dependent economies like Kenya.

At the same time, major economies are maintaining relatively tight monetary policies, keeping global borrowing costs elevated.

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This limits the room for smaller economies to diverge significantly without risking capital outflows.

If CBK holds the rate at 8.75 percent, borrowing costs are likely to remain relatively stable in the short term.

For businesses, this offers predictability, but not necessarily relief.

Many firms are still grappling with high operating costs, and a pause in rate cuts means cheaper credit may not come as quickly as some had hoped.

For households, the impact will be similar: stability in loan rates, but limited immediate easing of financial pressure.

The banking sector’s position reflects a broader shift toward caution.

After a period of relative optimism marked by easing inflation and currency stability, the focus is now returning to risk management.

Holding rates steady would signal that policymakers are prioritising stability over aggressive growth stimulation, at least for now.

Kenya’s monetary policy is increasingly being shaped not just by domestic conditions, but by global dynamics.

What happens in oil markets, currency flows and international finance is now directly influencing decisions at the central bank.

The call to hold rates at 8.75 percent is less about resisting change, and more about buying time.

Time to assess global risks, time to protect economic stability, and time to avoid policy moves that could prove costly in an uncertain environment.

For the Central Bank of Kenya, the decision ahead is not just about interest rates, it is about navigating a world where uncertainty is becoming the norm.