CBK retains benchmark rate at 8.75pc

The  Central Bank of Kenya (CBK) has maintained the benchmark lending rate at 8.75 per cent for the third consecutive time since February, citing a positive outlook on the country's economic growth.

The Monetary Policy Committee yesterday said overall inflation is expected to remain within the target range in the

near term, assuming a de-escalation of the conflict in the Middle East.

"This will be supported by appropriate monetary policy actions, government interventions, expected stability in food prices, and a stable exchange rate," the committee said in a statement signed by its chairman and CBK governor Kamau Thugge.

It said the CEOs Survey and Market Perceptions Survey conducted in July 2026 revealed sustained optimism about business activity and economic growth prospects for the next 12 months.

"The optimism was attributed to continued macroeconomic stability, government support for the agriculture sector and prospects for favourable weather conditions, increased infrastructure spending, increased digital innovations, stable exchange rate, and improved

private sector credit growth."

The growth of the Kenyan economy accelerated to 5.3 per cent in the first quarter of 2026 compared to 4.9 per cent in the first quarter of 2025, reflecting broad-based growth across all sectors of the economy, with stronger growth in industry and services sectors, CBK said.

This is projected to pick up to 4.9 per cent in 2026 and 5.3 per cent in 2027, from 4.6 per cent in 2025, "supported by a robust industrial sector, resilient services, and the stable growth of agriculture".

In addition, the banking sector remains stable and resilient, with strong liquidity and capital adequacy ratios. The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.6 per cent in July 2026, down from 15.4 per cent in April 2026, and 17.6 per cent in August 2025.

Decreases in NPLs were noted in the manufacturing, building and construction, trade, agriculture, and real estate sectors. Banks have continued to make adequate provisions for the NPLs.

"Having considered these developments, the committee concluded that the current monetary policy stance, with the Central Bank Rate unchanged at 8.75 per cent, remains appropriate to ensure that inflation expectations remain anchored within the target range, and the exchange rate remains stable," MPC said.

However, CBK said it will continue to monitor the changes in global oil prices and any second-round effects on inflation, as well as other developments in the global and domestic economies.

MPC is scheduled to meet again in October 2026.