The Monetary Policy Committee of the Central Bank of Kenya (CBK) elected to cut the Central Bank Rate (CBR) by 25 basis points to 9.50% from 9.75%. This marks the seventh consecutive cut of the CBR since August 2024, when the CBR stood at 13%. The lowering of the rate continues to pile pressure on commercial lenders to lower their lending rates and make it easy for the private sector to access loans.
CBK Cuts Rates to Push Banks Towards Cheaper Lending
Despite the total non-performing loans hitting KES 724.2 billion in April, the CBK hopes that the cut will trigger commercial banks to reduce loan costs and lend more to the private sector to stimulate economic growth.
“The committee concluded that there was scope for further easing of the monetary policy stance to augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity, while ensuring inflationary expectations remain firmly anchored, and the exchange rates remain stable,” CBK said in a statement after the MPC meeting.
Commercial banks’ lending to the private sector continued to improve and stood at 3.3% in July 2025, up from 2.2% in June. Lending to key sectors of the economy, particularly manufacturing, trade, consumer durables, and building and construction, improved in June and July. Despite the continued CBR cuts by the Monetary Policy Committee, commercial banks’ lending rates have remained high, with the average lending rates standing at 15.2% in July from 15.3% in June.
The MPC will continue to monitor the impact of the CBR cut as well as developments in the global and domestic economy and take the necessary action in line with its mandate.
In contrast, the Monetary Policy Committee of the Bank of Uganda (BOU) elected to maintain the Central Bank Rate at 9.75%, bringing it higher than Kenya’s CBR for the first time since 2023.
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