Kenya Halts Rate-Cut Cycle

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.

Kenya's central bank trimmed its benchmark interest rate by 25 bps to 8.75% on February 10, 2026, marking its tenth consecutive rate cut following a similar move in December. Policymakers said the decision builds on previous policy actions designed to stimulate private-sector lending and support economic activity, while safeguarding price stability and a stable exchange rate. The annual inflation rate in Kenya eased to a six-month low of 4.4% in January 2026, from 4.5% in December, staying below the 5% midpoint of the central bank’s target range. It is expected to remain below the midpoint of the target range in the near term. Meanwhile, the central bank noted that Kenya’s economy remained resilient in Q3 2025, with the GDP rising 4.9%. Full-year GDP growth is now projected at 5% for 2025, down from the previous 5.2% estimate because of slower agriculture, and is expected to accelerate to 5.5% in 2026 and 5.6% in 2027, supported by services and industry.

The Central Bank of Kenya slashed its benchmark interest rate by 25 bps to 9% in its December 2025 meeting, marking the ninth consecutive rate cut. Governor Kamau Thugge said the decision “will augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity”. "The cut will also ensure inflation expectations stay firmly anchored, and the exchange rate remains stable", he added. The annual inflation rate in Kenya eased to 4.5% in November from 4.6% in each of the previous two months. Inflation has been below the 5% midpoint of the central bank’s target band since mid-2024. It is expected to remain below that level in the near term, thanks to lower processed food prices, stable energy costs, and continued exchange rate stability.