Kenyans are set to enjoy cheaper bank loans following a decision by the Central Bank of Kenya (CBK) to lower its benchmark lending rate by 25 basis points to 9.75 percent.
In a statement released on Tuesday, June 10, the Monetary Policy Committee (MPC) said that the decision was made after concluding that there is room for further easing of the monetary policy without compromising inflation stability or the exchange rate.
Further, the committee indicated that the new rate is a decrease from 10.00 per cent.
The move is meant to support economic activity while ensuring inflationary expectations remain firmly anchored and the exchange rate remains stable.
“The MPC will closely monitor the impact of this policy decision as well as developments in the global and domestic economy and stands ready to take further action as necessary in line with its mandate.
“The Committee will meet again in August 2025,” read the report from the committee in part.
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CBK Notes that the Economy Shows Signs of Recovery
At the same time, CBK has noted that inflation continues to ease and early signs of economic recovery are showing.
The decision to lower the lending rate comes amid growing concerns over a slowing global economy, with growth projected at 2.8 percent in 2025, down from 3.3 percent in 2024.
The slowdown is largely due to weaker growth in the U.S. and China, the world’s largest economies, following the impact of increased trade tariffs and ongoing geopolitical tensions.
However, although both countries have softened their earlier tariff threats, there is still uncertainty over ongoing trade talks.
On the other hand, global inflation has eased slightly but remains stubborn in some areas. Oil prices have stabilized due to higher production and weak demand, especially from China.
Food inflation has come down, especially for cereals and sugar, but prices for edible oils are still high.
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Outlook for Kenya
In Kenya, inflation dropped to 3.8 percent in May from 4.1 percent in April, below the mid-point of the Central Bank’s target range.
According to CBK, the drop was driven by falling prices of vegetables and lower electricity costs.
However, core inflation, which excludes food and energy, increased slightly to 2.8 percent in May from 2.5 percent in April because of higher prices of processed food.
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