The Kenya Bankers Association (KBA) is calling on the Central Bank of Kenya (CBK) to implement another cut to the Central Bank Rate (CBR) as the Monetary Policy Committee (MPC) prepares to meet on December 9, 2025.
In its latest Research Note released on December 3, KBA stated that global inflation has eased while domestic inflation remains stable, supported by improved food production and better supply conditions. The association noted that these trends create room for a further reduction in the benchmark rate.
“In light of the above developments, and the balance of risks, we view that there is scope for a further cut in the Central Bank Rate, to bolster private sector credit growth and stimulate economic growth,” read part of the report.
Despite the positive inflation outlook, KBA warned that key risks persist, including the impact of geopolitical tensions, volatility in global oil prices, and rising import costs.
KBA Calls for Lower Interest Rates Ahead of December 9 MPC Meeting
According to KBA, lower lending rates have contributed to gradual growth in private-sector credit.
The association also pointed to a strengthened external sector, supported by a narrower current account deficit, robust remittance inflows, strong export earnings, and a stable shilling backed by adequate foreign-exchange reserves.
KBA maintains that a further CBR cut would help ease borrowing costs, stimulate private-sector lending, and reinforce economic recovery efforts.
The report also noted that Kenya’s economy continues to show resilience, supported by stronger industrial activity, a steady rebound in services, and sustained agricultural performance.
However, the recovery remains fragile due to softer global demand, weaker external trade, and ongoing fiscal pressures.
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Inflation Rate Declines
Inflation in Kenya slowed slightly to 4.5% in November 2025, down from 4.6% in October.
The association noted that while non-core inflation edged up to 10.1% from 9.9% in October, driven mainly by higher prices of fresh produce such as onions and rising transport costs, core inflation fell to 2.3% from 2.7%, reflecting weaker demand pressures in the economy.
“Domestically, Kenya’s financial market conditions have eased, and liquidity conditions have improved. The monetary policy transmission has been strengthened with KESONIA becoming more stable and aligned to the Central Bank Rate (CBR),” read the report.
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KBA also said the Central Bank Rate (CBR) adjusted for inflation remains on a downward trend, suggesting that the ongoing monetary policy easing is non-inflationary.
Looking ahead, the association expects global commodity prices to stabilize and domestic supply conditions to improve.
With strong local food production, inflation is projected to stay near the mid-point of the target band in 2026. However, risks persist from geopolitical tensions, oil price volatility, and tariff-driven external pressures.
“Going forward, there are expectations of global commodity prices stabilizing at lower levels and supply conditions improving,” read the report.
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