Kenyans will continue benefiting from more affordable loans over the next two months after the Central Bank of Kenya (CBK) once again lowered the base lending rate. This marks the fifth time the CBK has cut the rate since August 2024.
In a report released on Tuesday, April 8, the CBK’s Monetary Policy Committee (MPC) announced that it had reduced the base lending rate by 75 basis points—from 10.75% to 10.00%.
CBK Governor Dr. Kamau Thugge explained that the move was aimed at encouraging commercial banks to increase lending to businesses and individuals.
This, he said, would help boost economic activity while also maintaining stability in the exchange rate.
During his address, Dr. Thugge shared that global economic growth has been steadily recovering since 2024.
He noted that this recovery is largely driven by strong performance in major economies like the United States and leading emerging markets such as India.
However, he cautioned that while global inflation levels have generally decreased, uncertainty remains—particularly due to the possible inflationary effects of rising import tariffs.
Dr. Thugge also pointed out that central banks in key global economies are continuing to lower their interest rates. However, the pace at which they are doing so differs, depending on each country’s outlook on inflation and economic growth.
In addition, the CBK report mentioned that international oil prices have eased slightly. This decline is linked to increased global oil production and reduced demand.
Still, the risk of sudden price changes remains high, mainly due to ongoing geopolitical tensions and the impact of higher tariffs on imports.
The CBK Governor further observed that food prices in Kenya have stabilized, especially due to reduced prices of cereals and sugar. However, he warned that the cost of edible oils remains high, which continues to put pressure on household budgets.
As of March 2025, Kenya’s overall inflation stood at 3.6%, up slightly from 3.5% in February. Despite this small increase, inflation remains well within the government’s target range of 5% ± 2.5%, meaning prices are relatively stable.
Dr. Thugge also noted that lower electricity and fuel prices have helped bring down non-core inflation (which excludes volatile food and energy prices). This, in turn, has helped keep general price levels in check.
Looking ahead, the CBK expects inflation to stay below the mid-point of the target range in the short term. This is based on continued stability in food, energy, and core inflation, as well as a steady exchange rate.
The CBK also expressed optimism about Kenya’s economic outlook. According to Dr. Thugge, the country’s real Gross Domestic Product (GDP) is projected to grow by 5.4% in 2025.
This growth is expected to be driven by strong performance in key service sectors and a recovery in agriculture.
In conclusion, the CBK Governor reassured the public that the bank will keep a close eye on how the new policies affect the economy.
He added that the Central Bank is prepared to take further measures if needed to ensure continued economic stability and growth.
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