The Central Bank of Kenya (CBK) has maintained the Central Bank Rate (CBR) at 8.75% following its Monetary Policy Committee meeting on August 11, 2026.
The decision comes as Kenya’s inflation stood at 6.5% in July, while the economy grew by 5.3% in the first quarter of 2026.
“The current monetary policy stance, with the Central Bank Rate unchanged at 8.75 percent, remains appropriate to ensure that inflation expectations remain anchored within the target range, and the exchange rate remains stable,” read the statement in part.
CBK Holds Rate at 8.75 Percent
According to MPC, the current monetary policy stance remains appropriate, as a result of inflation that has remained within the target range and a stable exchange rate.
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Kenya’s overall inflation increased marginally from 6.4% in June to 6.5% in July 2026. Core inflation also edged up from 3.1% to 3.2%, while non-core inflation declined slightly from 15.1% to 15.0%.
The CBK attributed some of the decline in non-core inflation to lower energy-price inflation, supported by government interventions, including subsidies and a temporary reduction of VAT on fuel.
However, food prices remained a concern, with higher prices for vegetables including Irish potatoes, tomatoes, kales, cabbages and onions.
CBK said inflation is expected to remain within the target range in the near term, assuming the conflict in the Middle East de-escalates.
Average Bank Lending Rate Falls to 14.3%
Despite the unchanged CBR, commercial banks have continued to lower their average lending rates. The average rate stood at 14.3% in July, down from 14.4% in June and considerably below the 17.2% recorded in November 2024.
Private-sector credit growth also remained strong, reaching 10.2% in July, compared with 10.6% in June and -2.9% in January 2025.
CBK said increased lending to sectors such as trade, building and construction, agriculture and consumer durables reflected stronger demand for credit, partly in response to declining lending rates.
The banking sector also remained resilient. Gross non-performing loans as a proportion of gross loans fell to 14.6% in July, from 15.4% in April and 17.6% in August 2025. The decline was recorded across manufacturing, construction, trade, agriculture and real estate, while banks continued making provisions for non-performing loans.
“Growth in commercial banks’ lending to the private sector remained strong at 10.2 percent in July 2026 and 10.6 percent in June 2026, compared to -2.9 percent in January 2025,”read the statement.
CBK noted that the banking sector continued to maintain strong liquidity and capital adequacy ratios.
Economic Growth and Global Risks
Kenya’s economy grew by 5.3% in the first quarter of 2026, compared with 4.9% during the same period in 2025. The growth was broad-based, with stronger performance in the industrial and services sectors.
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The CBK projects economic growth of 4.9% in 2026 and 5.3% in 2027, compared with 4.6% in 2025. The projections are supported by a resilient services sector, a robust industrial sector and stable agricultural growth.
The Committee, however, highlighted risks from the conflict in the Middle East, elevated global energy prices, trade-policy uncertainty and possible adverse effects from the El Niño weather phenomenon.
CBK also reported that foreign exchange reserves stood at US$15.249 billion, equivalent to 6.3 months of import cover, providing a buffer against domestic and external shocks.
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