Central Bank of Kenya Leaves Rates Steady

The central bank of Kenya left its key interest rate steady at 8.75% for a fourth consecutive meeting in October 2026, saying it saw inflation staying within its target range in the short term despite edging up in the past three months. Inflation in Kenya reached 6.8% in September 2026, its highest level since January 2024. Policymakers noted that government interventions, including subsidies and the temporary reduction of VAT on fuel, continue to mitigate inflationary pressures. The central bank also revised upwards its 2026 growth forecast to 5% from 4.9% seen in August, with El Niño representing a key risk to growth.

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.