By Benadeta Mwaura - Reporter
Kenya, 9 December 2025 - The Central Bank of Kenya (CBK) announced on 9 December 2025 that its Monetary Policy Committee (MPC) has cut the Central Bank Rate (CBR) by 25 basis points, lowering it to 9.00% from the previous 9.25%.
The decision marks the ninth consecutive rate cut in a broader easing cycle that began in 2024.
In its statement, CBK said the move is meant to support private-sector lending, stimulate economic activity, and build on prior policy actions while keeping inflation expectations anchored and maintaining exchange-rate stability.
Why CBK Cut Rates
CBK pointed to stable inflation and improving economic indicators as key reasons for the rate cut.
Data released ahead of the MPC meeting showed that Kenya’s annual inflation fell to 4.5% in November 2025, slightly down from 4.6% in October, comfortably within CBK’s target band of 2.5%–7.5%.
Meanwhile, private-sector activity has picked up: a recent survey found business sentiment at a five-year high, indicating stronger demand and improved economic conditions across sectors.
CBK Governor (and MPC chair) Kamau Thugge said the move “will augment previous policy actions aimed at supporting economic activity while ensuring inflationary expectations remain firmly anchored.” As noted in earlier CBK communications.
What It Means for Banks and Borrowers
With the CBR reduced to 9.00%, commercial banks are now under pressure to pass on the lower cost of funds to consumers and businesses in the form of cheaper loans and mortgages, a move that could spur borrowing and investments.
In recent cuts, some banks have already started easing their lending rates, a trend expected to accelerate under the new refinancing environment. Probably, the drop should give a fresh boost to private-sector credit growth, which has lagged despite earlier cuts.
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Timing and Outlook
The rate cut comes at a moment when several indicators suggest Kenya’s economy could be gaining momentum.
Growth projections for 2025 and 2026 remain optimistic, with services, industry, and agriculture sectors showing signs of resilience, provided global economic risks remain manageable.
CBK also signalled its readiness to act again if necessary, depending on global and domestic developments.
The next MPC meeting is expected to take stock of how these changes affect credit flows, inflation, and the broader economy.
What to Watch
All eyes on now to see whether commercial banks pass the rate cut through to customers in lower borrowing costs.
Check the impact on credit uptake by businesses and consumers, especially in housing, SMEs, and investment sectors.
See how exchange rates and inflation evolve in the coming months amid global uncertainties.
And whether further rate cuts are on the horizon if economic headwinds intensify, a move CBK has kept on the table.
