Investment

Borrowers Get Relief As CBK Keeps Lending Rate At 8.75%

BY Getrude Mathayo · October 8, 2026 01:10 pm

The Central Bank of Kenya (CBK) has left its benchmark rate untouched at 8.75 percent, pointing to a steady economy even as global pressures mount.

The Monetary Policy Committee (MPC) announced the decision after its October 7 meeting, marking the eighth consecutive hold.

“The MPC decided to maintain the Central Bank Rate (CBR) at 8.75 percent, during its meeting held on October 7, 2026,” the statement read in part. For borrowers and businesses looking for loans, it means no sudden changes in the cost of credit.

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According to the CBK, inflation remains within the target ceiling of 6.8 per cent despite shocks from the Middle East conflict. It rose to about 4 per cent in September, driven mainly by higher prices of milk, edible oils and wheat, which Kenyans have been grappling with for more than two months.

There was some relief elsewhere. Non-core inflation, which covers items like fresh produce, electricity, fuel and transport, slipped to 14 per cent from 14.7 percent as vegetable prices eased and energy costs fell. Government measures, including lower fertiliser prices, also continued to cushion consumers.

On growth, the committee expects the economy to expand by 5.3 percent in 2027, led by industry and services. It cautioned, however, that unpredictable geopolitical crises and natural shocks such as El Niño remain serious risks.

Even with the rate unchanged, commercial bank lending rates crept up to an average of 14.4 percent in September from 14.3 percent in August. The shilling has held steady at Ksh129 since April.

Credit to the private sector kept growing, with lending up 10.6 percent in September, compared with 10.3 percent in August and a 2.9 percent contraction in January 2025.

The banking sector stayed stable, with gross non-performing loans falling to 13.9 percent in September from 14.8 percent in June. Foreign exchange reserves stood at USD 14.7 billion, or roughly Ksh1.9 trillion.