Since August 2024, the Central Bank of Kenya (CBK) has progressively cut the Central Bank Rate (CBR) severally and rolled out a new Risk-Based Credit Pricing Model (RBCPM) as they seek to bring a cheaper and more effective lending model for Kenyans.
The decision was however met with resistance from most banks initially, citing high‑cost deposits locked at prior rates and risk concerns.
However, CBK warned lenders to act in the same way they did when rates rose or face the consequences.
The first cut in August 2024 pushed the rates marginally, from 17.22% in November to 16.89% in December, which CBK described as an inadequate transmission.
On February 5, 2025, CBK cut the CBR to 10.75%, along with tougher regulations for banks and on-site inspections to enforce the RBCPM.
CBK highlighted legal powers to levy daily fines and multi‑million-shilling penalties for non‑compliance, instructing Equity, KCB, Co‑op, NCBA, I&M and others to announce sizeable reductions within days.
CBK lowered CBR further to 10.00% on Apr 8, 2025, and warned of penalties for delays.
The latest Central Bank Rate (CBR) set by the Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK) is 9.25%, following a 25 basis point cut at the MPC meeting held on October 7, 2025.
Banks that Revised Their Rates
After months of regulatory pressure and threats of penalties, all 38 licensed banks have either implemented or announced reductions, with tier-one lenders leading the charge.
Equity Bank cut its lending rates by 3 percentage points, setting its new rate at 14.39%, effective February 13 for new loans and March 1 for existing facilities.
KCB Bank lowered its base rate from 15.6% to 14.6% on February 10, then trimmed again to 13.85% in April, ahead of its December migration to CBK’s risk-based model.
Co-operative Bank trimmed its base rate from 16.5% to 14.5%, with the bank betting on higher loan volumes, better credit growth and a broader customer base to offset any short-term margin compression.
NCBA Bank initially announced a base lending rate of 15.34% effective February 16, 2025, before bringing its base rate down to 14.2%.
Absa Bank Kenya first lowered its base lending rate to 10.75% for new loans in March 2025, with existing loans transitioning by March 13, then further to 9.95% by November, making it the lowest among major banks.
I&M Bank implemented a 2% cut in March, followed by another reduction to 13.5% in October.
DTB adopted a phased approach to rate reductions and began by trimming its lending rate from 15.9% in January 2025 to 15.4% in the first quarter, followed by a second adjustment to 14.1% by September 2025.
Standard Chartered, Stanbic, Citibank, and Victoria Commercial Bank were among the first movers in adjusting their lending rates after CBK’s initial policy shift. Each bank implemented early cuts of 1.3–1.8 percentage points in the first half of 2025, and in November, all lenders moved their lending rates to between 13.00% and 13.50%.
Family Bank responded to CBK’s directive with progressive cuts, reducing its lending rate from highs of 16.80% in late 2024 to around 14.20% by November 2025.
Mid-Tier Banks
According to CBK’s July 2025 bulletin, Kenya’s mid-tier lenders have also aligned with CBK’s new pricing reforms.
CBK reported that Family bank’s lending rate stood at 16.40%, down from highs above 17% in late 2024.
National Bank of Kenya reduced their lending rate to 15.87% down from levels above 17% in late 2024.
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As of July 2025, Prime Bank’s average lending rate stood at 15.79%, down from previous highs of over 17% earlier in the year.
Kingdom Bank posted a lending rate of 15.80%, from levels above 17% recorded in late 2024.
Guardian Bank maintained one of the lowest mid-tier lending rates at 13.57% after the new CBK pricing model.
Habib Bank A.G Zurich reported 14.55%, after progressive reductions throughout the year.
Ecobank Kenya posted a lending rate of 13.72%, and positioning among the more affordable mid-tier lenders.
Paramount Bank registered 14. 47% in order to comply with CBK’s pricing reforms.
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Consolidated Bank posted lending rate of 13.61%, making it one of the most competitive mid-tier lenders.
Gulf African Bank reported a lending rate of 14.77%, down from previous highs earlier in the year.
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