The Central Bank of Kenya (CBK) has announced a reduction in the Central Bank Rate (CBR) by 25 basis points to 9 from 9.25 per cent, signalling a relief for borrowers across the country.
The decision was made during the Monetary Policy Committee (MPC) meeting held on December 9, 2025.
The decision will be a major boost for Kenyans seeking cheaper loans and mortgages since commercial banks use the CBR as a benchmark for setting lending rates.
''The Monetary Policy Committee (MPC) decided to lower the Central Bank Rate (CBR) by 25 basis points to 9.00 per cent from 9.25 per cent, during its meeting held on December 9, 2025,'' CBK announced.
The MPC noted the decision came amid global growth that has remained resilient, projected at 3.2 per cent in 2025, driven by strong consumer and business spending, particularly in the United States.
Nevertheless, global growth is expected to slow further to 3.1 per cent in 2026, primarily due to higher trade tariffs.
According to CBK, the ninth successive rate cut was also influenced by the global trend where Central banks in leading economies have cautiously eased monetary policies, reflecting diverse inflation and growth outlooks.
The regulator also stated that international oil prices have eased due to increased production and subdued global demand, though volatility remains amid ongoing global uncertainties.
Additionally, the bank reported that food inflation has decreased, driven by lower prices for cereals, sugar, and edible oils, which have helped to ease overall global price pressures.
Locally, Kenya’s overall inflation dropped to 4.5 per cent in November 2025 from 4.6 per cent in October, remaining below the mid-point of the target range of 5±2.5 per cent.
Core inflation also declined to 2.3 per cent from 2.7 per cent, largely due to falling prices of processed food items, including maize flour and sugar.
Non-core inflation, however, rose to 10.1 per cent in November from 9.9 per cent in October, mainly driven by higher prices for vegetables such as tomatoes, onions, and cabbage.
Despite this, overall inflation is expected to stay below the midpoint of the target range in the near term, supported by stable energy prices, continued exchange rate stability, and lower processed food prices.
At the same time, Kenya’s economy demonstrated resilience in the first half of 2025, with real GDP growth averaging 4.9 per cent.
Economic growth is projected to pick up to 5.2 per cent in 2025 and 5.5 per cent in 2026, boosted by continued strength in key service sectors, agriculture, and ongoing recovery in the industrial sector.
However, the MPC, which is set to sit again in February next year, noted that risks such as adverse weather conditions, trade policy uncertainties, and geopolitical tensions could affect this outlook.
