Kenyans to Enjoy Cheaper Loans as CBK Lowers Interest Rates on Loans Again

The Central Bank of Kenya (CBK) has lowered the Central Bank Rate (CBR) again following a Monetary Policy Committee (MPC) meeting.

This means that Kenyans will be able to enjoy cheaper loans for various items as the CBR is the interest rate at which the central bank lends money to commercial banks.

The MPC on Tuesday, April 8, met and reviewed the outcomes of its previous decisions and measures implemented to anchor inflationary expectations and maintain exchange rate stability.

In a press release, the Central Bank announced that the committee lowered the CBR by 75 basis points to 10.00 percent from 10.75 percent, the lowest the benchmark has been since May 2023.

According to CBK, central banks in the major economies have continued to lower their interest rates, but at different paces depending on inflation and growth expectations.

CBK on average lending rates

Also, average lending rates have been declining gradually since December 2024, but private sector credit growth remains subdued.

“The Committee concluded that there was scope for a further easing of the monetary policy stance to stimulate lending by banks to the private sector and support economic activity, while ensuring exchange rate stability,” read part of the press release.

“The MPC will 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. “

At the same time, CBK said that the average commercial banks’ lending rates declined to 15.8 percent in March 2025 from 16.4 percent in February and 17.2 percent in November 2024.

Also Read: CBK Reveals Banks with Lowest & Highest Loan Interest Rates as of February 2025

MPC on width of interest rate corridor

The MPC further approved the narrowing of the width of the interest rate corridor around the CBR from the current 150 basis points to ±75 basis points to enhance the effectiveness of the monetary policy implementation framework.

“This will enhance the stability of the interbank rate and align the rate closer to the Central Bank Rate (CBR). In line with this review, the Committee also approved the adjustment of the applicable interest rate on the Discount Window from the current 300 basis points above CBR to 75 basis points, which will be the upper bound of the interest rate corridor,” the press release adds.

Further, the committee noted the ongoing implementation of the FY2024/25 Supplementary Budget I, and the proposed Supplementary Budget II, which is expected to lower the fiscal deficit to 5.1 percent of GDP from 5.3 percent of GDP in FY2023/24.

Also Read: Billions KCB, Co-operative, Equity & Other Top Kenyan Banks Made in 2024

The fiscal consolidation in the medium term should reduce debt vulnerabilities while moving the present-value-of-debt to GDP ratio towards the target anchor of 55 percent, according to CBK.

The Committee met against a backdrop of elevated uncertainties to the global outlook for growth, lower but sticky inflation in advanced economies, heightened trade tensions, and persistent geopolitical tensions.

Overall inflation was expected to remain below the midpoint of the 5±2.5 percent target range in the near term.

The Committee will meet again in June 2025.

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