The Central Bank of Kenya’s (CBK) Monetary Policy Committee (MPC) met on June 9, 2026, and opted to keep the Central Bank Rate (CBR) unchanged at 8.75 percent. The decision comes as inflation surged to 6.7 percent in May, the highest in two years, driven by elevated global oil prices and their pass‑through effects on transport and food costs.
The committee acknowledged that the Middle East conflict has disrupted supply chains, pushing energy prices higher and moderating global growth prospects. While Kenya’s inflation remains within the CBK’s target band of 5±2.5 percent, core inflation rose to 3.2 percent in May, reflecting higher transport costs, while non‑core inflation spiked to 16 percent due to fuel and gas prices.
Despite calls from the Kenya Bankers Association (KBA) for a rate hike—the first since 2023—to anchor inflation expectations, the MPC judged that holding the rate steady was the most appropriate stance. The CBK emphasized that current inflationary pressures are largely imported and that premature tightening could undermine growth momentum.
CBK’s Rate Comes with Growth Down at 4.6 Percent.
Domestically, growth slowed to 4.6 percent in 2025, with projections for 2026 revised down to 4.9 percent. Surveys show cautious optimism among businesses, buoyed by expectations of better weather, infrastructure spending, and digital innovation, but tempered by concerns over global uncertainties and weak consumer demand. The banking sector remains stable, with non‑performing loans easing and private sector credit growth improving to 9.3 percent in May.
The CBK MPC signaled vigilance, noting that it will continue to monitor global oil prices and second‑round effects on inflation, and that it stands ready to act if necessary. Our key takeaway from the MPC meeting was that the CBK remains cautious but flexible. If headline inflation breaches 7 percent or the shilling weakens materially, the likelihood of a symbolic 25 basis‑point hike in the third quarter rises significantly.
The committee will reconvene in August 2026, with its next decision hinging on whether inflationary pressures persist or ease with global developments. For now, the CBK has chosen stability over pre‑emptive tightening, balancing the risks of imported inflation against the need to support Kenya’s fragile recovery.
Also Read: CBK MPC Meets amid Rising Inflation and Industry Pressure.
