Kenya Cuts Benchmark Rate to 9.5% in Seventh Straight Easing
TLDR
- The Central Bank of Kenya (CBK) lowered its benchmark lending rate by 25 basis points to 9.50% from 9.75%, marking its seventh consecutive cut
- The move is in line with analyst expectations and comes as inflation remains well within the target band of 2.5% to 7.5%
- Despite easing inflation, Kenya’s public finances remain under pressure from large debt repayments and lower-than-expected revenues
The Central Bank of Kenya (CBK) lowered its benchmark lending rate by 25 basis points to 9.50% from 9.75%, marking its seventh consecutive cut. The move is in line with analyst expectations and comes as inflation remains well within the target band of 2.5% to 7.5%.
Annual inflation rose to 4.1% in July from 3.8% in June, driven by moderate price pressures, but remains contained. The CBK said the decision leaves room for further policy easing to support bank lending to the private sector.
Despite easing inflation, Kenya’s public finances remain under pressure from large debt repayments and lower-than-expected revenues. The CBK maintained GDP growth forecasts at 5.2% for 2025 and 5.4% for 2026, and kept its projection for the current account deficit at 1.5% of GDP, compared with 1.3% last year.
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Points clés à retenir
The rate cut reflects the CBK’s confidence in price stability, but also signals its intent to stimulate credit and investment amid subdued growth momentum. However, heavy debt servicing and revenue shortfalls could limit fiscal flexibility, placing more weight on monetary policy to support economic activity. If inflation remains within target, further cuts are possible, though the CBK will need to monitor currency stability and external balances closely to avoid undermining investor confidence and capital flows.
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