Kenyans are set to continue accessing cheaper loans for the next two months following the Central Bank of Kenya's (CBK) decision to lower the base lending rate for the fifth successive time since August last year.
CBK, in its latest Monetary Policy Committee (MPC) report published on Tuesday, April 8, announced that it had reduced the base lending rate by 75 basis points to 10.00 per cent from 10.75 per cent.
According to CBK Governor Kamau Thugge, the decision to lower interest rates was to stimulate lending by banks to the private sector and support economic activity while ensuring exchange rate stability.
While making the announcement, Thugge noted that global growth was on a steady recovery from 2024, supported by strong growth in the United States and the large emerging market economies, particularly India.
The CBK boss also disclosed that global headline inflation had moderated but warned that the outlook was uncertain with expectations of a potential inflationary impact of higher tariffs on imports.
He further noted that central banks in major economies continued to lower their interest rates, but at different paces depending on inflation and growth expectations.
Similarly, the regulator revealed that international oil prices had moderated due to increased production and subdued demand, but the risk of potential volatility remains elevated due to increased tariffs on imports and persistent geopolitical tensions.
"Food inflation has moderated, driven by lower cereals and sugar prices inflation," the CBK Governor stated but warned that edible oil price inflation remained elevated.
"Kenya's overall inflation stood at 3.6 per cent in March 2025 compared to 3.5 per cent in February and remained below the mid-point of the target range of 5±2.5 per cent," he added.
Additionally, the CBK boss stated that lower energy and utilities inflation continued to moderate non-core inflation on account of lower electricity and pump prices.
According to Thugge, the overall inflation was expected to remain below the midpoint of the target range in the near term, supported by a low core inflation, lower food inflation, stable energy price inflation, and continued exchange rate stability.
He also assured Kenyans that the performance of the economy was expected to pick up in 2025, with real Gross Domestic Product (GDP) growth projected at 5.4 per cent, supported by the resilience of key service sectors and agriculture.
Thugge said the Central Bank would closely monitor the impact of the policy measures as well as developments in the global and domestic economy and stands ready to take further action as necessary in line with its mandate.
