CBK Keeps Lending Rate Steady, Offering Relief to Borrowers Amid Global Uncertainty
Borrowers across Kenya have received some welcome relief at a time of growing global economic uncertainty after the Central Bank of Kenya (CBK) decided to leave its benchmark lending rate unchanged.
In its latest Monetary Policy Committee (MPC) meeting held on April 8, 2026, the CBK maintained the Central Bank Rate (CBR) at 8.75 per cent, a move aimed at preserving economic stability while allowing earlier rate cuts to continue supporting credit growth.
In its statement, the CBK explained that the decision was informed by the country’s stable inflation outlook, resilient economic performance, and stronger lending activity in major sectors of the economy.
According to the committee, inflation has remained comfortably below the midpoint of its target range, helped by stable core inflation, favourable weather conditions that have supported food supply, and a largely stable Kenya shilling.
The decision comes at a sensitive time for the global economy, with risks rising sharply due to the ongoing conflict in the Middle East.
The war has disrupted global supply chains and triggered a fresh rise in international energy prices, increasing concerns over imported inflation.
Before the conflict escalated, global growth in 2026 had been projected at 3.3 per cent, but the latest developments are now expected to slow that pace as countries struggle with higher fuel costs, sticky inflation, and weaker consumer demand.
The CBK also noted that the prolonged Russia-Ukraine war, alongside growing uncertainty around global trade policies, continues to threaten worldwide growth prospects.
These international pressures remain a major concern because they can easily spill over into Kenya through fuel prices, food imports, and overall business costs.
Despite these global shocks, Kenya’s inflation has remained relatively stable. Overall inflation rose only slightly to 4.4 per cent in March 2026, up from 4.3 per cent in February, keeping it close to the midpoint of the CBK’s target band of 5 ± 2.5 per cent.
This suggests that, for now, domestic price pressures remain under control even as global conditions become more volatile.
Core inflation, which excludes volatile items such as food and fuel, also stayed low at 2.1 per cent. This was largely supported by lower prices of processed food products, especially essentials such as sugar and maize flour, which continue to play a major role in household spending.
However, pressure was seen in non-core inflation, which covers more volatile items. This measure increased to 10.8 per cent in March, compared to 10.1 per cent in February, mainly due to rising prices of vegetables such as tomatoes and Irish potatoes.
These increases reflect seasonal supply movements as well as transport costs linked to higher fuel prices.
Even with these pressures, the CBK remains optimistic that inflation will stay within the target range in the near future. The bank expects stable food prices, good weather, and exchange rate stability to help cushion the economy against external shocks, even as oil prices remain a risk.
Kenyan Economy Remains Strong
On the broader economy, Kenya continued to show resilience. The CBK estimates that the economy grew by 5.0 per cent in 2025, an improvement from 4.7 per cent in 2024.
This growth was supported by a recovery in the industrial sector, continued strength in services, and stable performance in agriculture, which remains one of the country’s key pillars.
Looking ahead, the CBK now projects economic growth of 5.3 per cent in 2026, slightly lower than the earlier forecast of 5.5 per cent.
The small downward revision reflects the emerging risks associated with the Middle East conflict, especially its likely effect on fuel imports, production costs, and consumer spending.
Survey feedback from the agricultural sector also pointed to expectations of stable food prices in the coming months, mainly because of favourable weather conditions and a steady shilling. Even so, respondents warned that rising global oil prices could still create fresh inflationary pressure through transport and logistics costs.
Business confidence, according to the March 2026 CEOs Survey and Market Perceptions Survey, remained generally positive. Many firms still expect steady performance in the months ahead, supported by easing borrowing costs and improved access to credit.
However, companies also raised concerns over persistent global uncertainty, the high cost of doing business, and weak consumer demand, all of which could slow private sector expansion if left unchecked.
Overall, the CBK’s decision to hold rates steady signals a cautious but supportive approach—one that seeks to protect borrowers from sudden loan cost increases while giving the economy room to grow in an increasingly uncertain global environment.
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