NAIROBI, Kenya — The Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK) has, for the ninth time in a row, announced a cut to the base lending rate, dropping it from 9.25 per cent to 9 per cent. This decision signals a further easing of the monetary environment in the Kenyan market.
During its final meeting of the year, the committee resolved to reduce the rate by 25 basis points (bps). This move brings the cumulative rate cut to 400 basis points, marking the highest cumulative interest rate reduction in Kenya’s history.
According to Central Bank Governor Kamau Thugge, the strategic reduction is intended to amplify previous policy measures designed to stimulate economic activity and boost private sector lending.
The CBK noted an encouraging trend, reporting that lending to the private sector had already improved to 6.3 per cent in November, up from 5.9 per cent in October.
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Governor Thugge affirmed that the policy action aims to “stimulate lending by banks to the private sector and supporting economic activity.”
The CBK also expressed optimism regarding the forthcoming revision of the banking sector’s credit pricing model. The new risk-based system, which is slated to be fully operational by March 2026, is expected to enhance the effectiveness of monetary policy decisions.
The Central Bank anticipates that the model will improve the transmission of these rate changes to commercial banks’ lending rates, thereby increasing transparency in the pricing of loans across the sector.
