KCB Reduces Interest Rates on New and Existing Loans

The Kenya Commercial Bank (KCB) has announced a reduction in interest rates charged on loans in response to the recent adjustment of the Central Bank Rate (CBR) by the Central Bank of Kenya.

In a statement on Thursday, April 8, KCB announced the reduced lending rates from 14.6 percent to 13.85 percent.

KCB noted that the revised rates will take effect from April 11, 2025, for new loans, and from May 11, 2025, for existing loans.

“In line with the Central Bank of Kenya’s recent Central Bank Rate (CBR) adjustment, we have reduced our base lending rate from 14.6% to 13.85% per annum,” the notice read in part.

KCB Reduces Interest Rates on Loans

The bank clarified that the final lending rate will be determined based on individual customers’ credit profiles under its Risk-Based Credit Pricing Model.

The new rates apply only to Kenya Shilling-denominated facilities.

According to KCB, this move is aimed at making credit more affordable and stimulating economic activity across the country.

The move follows a decision by the Central Bank of Kenya (CBK) to lower the Central Bank Rate (CBR) after Monetary Policy Committee (MPC) meeting held on Tuesday April 8.

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CBK Cuts Rate to 10 Percent

CBK announced that the committee had reduced the CBR by 75 basis points to 10.00 percent from 10.75 percent — the lowest the benchmark rate 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.

“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.”

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At the same time, CBK revealed Commercial bank lending to the private sector recorded a modest growth of 0.2 percent in March 2025 from a contraction of 1.3 percent in February.

CBK stated that this reflects the dissipation of exchange rate valuation effects on foreign currency denominated loans following the appreciation of the Shilling, and improved demand with declining lending interest rates.

However, 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.

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.

The Committee also authorized 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.

According to CBK, this will enhance the stability of the interbank rate and align the rate closer to the Central Bank Rate (CBR).

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