Kenya Interest Rate

The Central Bank of Kenya left its benchmark interest rate at 8.75% on August 11th, 2026, a third straight hold, as policymakers stated that the current stance of monetary policy remained appropriate to ensure price and exchange rate stability. Headline inflation rose to 6.5%, driven by higher fuel costs that pushed up transportation and food prices, but remained within the bank’s 5% ±2.5% target range. Meanwhile, economic growth accelerated to 5.3% in the first quarter of 2026, from 4% in the previous quarter. Looking ahead, inflation is expected to remain within the target range in the near term, assuming a de-escalation of the Middle East conflict. However, risks remain elevated as the stop-start US-Iran conflict continues to disrupt global energy and fertilizer markets.

The Central Bank of Kenya left its benchmark interest rate at 8.75% on June 9, 2026, a second straight hold, saying policy remains appropriate to anchor inflation expectations and support exchange rate stability. Inflation rose for a third month to 6.7% in May, the highest since January 2024, driven by higher energy costs but remaining within the 5±2.5% target band. It is expected to stay within target in the near term, assuming the de-escalation of the Middle East conflict. The central bank said this outlook will be supported by a combination of monetary policy actions, government interventions including fuel VAT reductions and subsidies, favorable weather conditions supporting stable food prices, and exchange rate stability. Meanwhile, leading indicators point to resilient activity in Q1 2026. The economy is projected to grow 4.9%, down from a previous estimate of 5.3%, reflecting continued uncertainty posed by the Middle East conflict and trade policy developments.

The Central Bank of Kenya held its benchmark interest rate at 8.75% on April 8, 2026, pausing after ten consecutive rate cuts since August 2024, totaling 425 basis points. The Committee said the current stance remains appropriate to keep inflation expectations anchored and the exchange rate stable, noting risks from recent oil price increases. Governor Kamau Thugge noted that the conflict in the Middle East has disrupted global supply chains, driving energy prices sharply higher and increasing risks to the global economic outlook. The annual inflation rate in Kenya ticked higher to 4.4% in March from a seven-month low of 4.3% in February but remains below the 5% midpoint of the central bank’s target range. It is expected to remain within the target range for the short term. Meanwhile, the central bank cut its economic growth outlook to 5.3% from an earlier projection of 5.5%, reflecting the emerging risks from the conflict.