The Kenya Bankers Association (KBA) has urged the Central Bank of Kenya (CBK) to maintain the Central Bank Rate (CBR) at 8.75 per cent when the Monetary Policy Committee (MPC) holds its meeting next week.
The KBA Centre for Research on Financial Markets and Policy said on Friday, October 2, that keeping the rate unchanged would help support the recovery of private-sector lending and maintain momentum in economic activity.
The MPC is set to convene on Wednesday, October 7, 2026, to assess prevailing monetary conditions before deciding whether to retain or adjust the CBR.
In its latest Research Note, the KBA research centre observed that inflation remains within the CBK's prescribed target band, although price pressures have increased in recent months.
Headline inflation climbed from 4.3 per cent in February to 6.8 per cent in September, bringing it closer to the upper end of the CBK's target range of 2.5 to 7.5 per cent.
According to the bankers, the increase was mainly driven by higher food and transport costs. Food inflation reached 9.5 per cent in September, while transport inflation stood at 15.6 per cent.
Despite the increase in consumer prices, KBA said demand-driven inflationary pressures remained subdued. Its projections also indicate that inflation could moderate as food availability improves following the start of harvests in key agricultural-producing areas.
“With inflation within the target range, and exchange rate stability sustained, sustaining the current stance of monetary policy, to anchor the recovery in private sector credit and economic activity is appropriate,” the research centre said.
KBA further cited economic growth as a factor supporting its recommendation, noting that real gross domestic product (GDP) grew by 5.3 per cent in the first quarter of 2026, up from 4.9 per cent recorded during the corresponding period in 2025.
Bankers Warn of Economic Risks
Despite supporting the retention of the current rate, KBA cautioned that several risks could undermine the economic recovery.
The association identified rising fuel and food prices, increased production and transport expenses, weaker global economic growth and the anticipated El Niño rains between October 2026 and the first quarter of 2027 among the key risks.
KBA said stability in the foreign exchange market continues to shield the economy from imported inflationary pressures.
It also noted that the prevailing monetary policy position, attractive interest-rate differentials and declining Treasury bill yields were helping to support the recovery of private-sector credit.
The recommendation comes after the MPC retained the CBR at 8.75 per cent during its August 11 meeting.
At the time, the committee said maintaining the rate would help anchor inflation expectations as the economy continued to navigate global uncertainties and risks associated with elevated oil prices.
