The Central Bank of Kenya (CBK) has kept its benchmark interest rate at 8.75 per cent for the eighth consecutive month, maintaining the current borrowing environment for households and businesses.
The decision was announced on Wednesday, October 7, following a meeting of the Monetary Policy Committee (MPC), which opted to retain the Central Bank Rate (CBR) at its existing level.
"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," CBK announced in a statement seen by Vantage Ke.
The unchanged rate means borrowers will continue operating under the same benchmark monetary policy stance as the regulator seeks to balance inflation control with economic growth.
Additionally, the committee projected that the economy would grow by 5 per cent, driven largely by strong performance in the industry and services sectors.
The decision, announced following the MPC meeting on October 7, leaves the benchmark rate unchanged for the eighth consecutive month, providing stability for borrowers and businesses seeking credit.
The CBK noted that inflation, which rose to about 4 per cent in September, was largely driven by increases in the prices of key food items, including milk, edible oils and wheat, which have remained elevated for more than two months.
However, non-core inflation, which covers food and energy-related items such as fresh produce, electricity, fuel and transport, eased to 14 per cent from 14.7 per cent. The decline was attributed to lower vegetable prices and reduced energy costs, while government interventions, including lower fertiliser prices, continued to cushion consumers.
The committee also projected that the economy would expand by 5.3 per cent in 2027, although unpredictable geopolitical crises and natural disasters, including El Niño, remain significant risks to economic growth.
Despite the unchanged benchmark rate, average commercial bank lending rates edged up slightly to 14.4 per cent in September from 14.3 per cent in August.
Meanwhile, the Kenyan Shilling remained stable at around Ksh129 against the US dollar, a level it has maintained since April.
Credit to the private sector continued to expand, with commercial banks recording lending growth of 10.6 per cent in September, up from 10.3 per cent in August and a negative 2.9 per cent in January 2025.
The banking sector also maintained stability, with gross non-performing loans declining to 13.9 per cent in September from 14.8 per cent in June.
Meanwhile, foreign exchange reserves stood at USD14.7 billion, equivalent to approximately Ksh1.9 trillion.
