Relief for Borrowers as CBK Keeps Interest Rate at 8.75% for 8 Straight Months

Relief for Borrowers as CBK Keeps Interest Rate at 8.75% for 8 Straight Months

The Central Bank of Kenya (CBK) has maintained the Central Bank Rate (CBR) at 8.75 per cent, keeping the benchmark interest rate unchanged for the eighth straight month.

The decision was announced on Wednesday, October 7, 2026, after a meeting of the Monetary Policy Committee (MPC), which assessed inflation, economic growth, credit conditions and risks facing the Kenyan economy.

CBK said the decision was supported by a stable economic outlook, despite continued uncertainty from global geopolitical tensions and disruptions linked to the conflict in the Middle East.

“The Monetary Policy Committee (MPC) decided to maintain the Central Bank Rate (CBR) at 8.75 percent, during its meeting held on October 7, 2026.”

The CBR was reduced to 8.75 per cent in February 2026 from 9 per cent before the MPC began holding the rate steady in subsequent meetings.

CBK explains interest rate decision

The latest decision means borrowers and businesses will continue operating under the same benchmark monetary policy environment as the CBK monitors inflation and lending conditions.

However, maintaining the CBR does not automatically mean commercial bank loan rates will remain unchanged. CBK data showed the average commercial bank lending rate stood at 14.34 per cent in August.

The Central Bank said inflation remained within its target range, although price pressures increased in September.

Overall inflation rose to 6.8 per cent in September from 6.6 per cent in August, largely because of higher core inflation. The increase was mainly linked to rising prices of processed food products, particularly milk and wheat products.

Food prices push inflation higher

The latest inflation figures show that food prices remain an important factor affecting household budgets.

CBK reported that core inflation increased to 4 per cent in September from 3.4 per cent in August. At the same time, non-core inflation, which includes items such as energy and some food products, declined to 14 per cent from 14.7 per cent.

The moderation in non-core inflation was supported by easing prices in some food and energy-related categories.

The CBK has continued to monitor the effects of global energy prices and geopolitical developments on the Kenyan economy.

Private sector credit continues to recover

The decision comes as lending to the private sector continues to improve.

CBK reported that commercial banks’ private-sector credit growth remained strong, reaching 10.2 per cent in July 2026. The growth has been supported by improved demand for credit as lending rates have declined from previous levels.

The banking sector has also remained stable, with CBK reporting strong liquidity and capital adequacy across the industry.

Kenya’s economic outlook remains stable

The Central Bank continues to expect economic activity to remain resilient, supported by sectors including services and industry.

However, the outlook remains exposed to external risks, including geopolitical tensions, changes in global energy prices and disruptions to international supply chains.

The Kenyan shilling has also remained relatively stable, while foreign exchange reserves continue to provide a buffer against external shocks. CBK reported reserves of about USD14.93 billion as of October 1, equivalent to 6.1 months of import cover.

The latest CBR decision signals continued caution by the monetary authorities as they balance the need to contain inflation with efforts to support economic growth and private-sector lending.

ironment, although actual loan costs will continue to depend on individual banks, credit risk and prevailing lending conditions.

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Relief for Borrowers as CBK Keeps Interest Rate at 8.75% for 8 Straight Months