Kenya Central Bank Cuts Benchmark Rate For 10th Straight

Wednesday 4th February 2026

By inAfrika Newsroom

Kenya central bank rate cut became the latest policy signal from Nairobi on Tuesday after the Central Bank of Kenya reduced its benchmark lending rate for the 10th consecutive time, trimming it to 8.75% from 9.00% to support private-sector credit growth.

The decision, taken by the Monetary Policy Committee, follows a period of easing inflation and aims to lower borrowing costs across the economy. Kenya’s inflation eased to 4.4% in January from 4.5% in December, remaining within the central bank’s 2.5%–7.5% target range, according to Reuters.

Kenya’s rate path matters beyond its borders because it is a regional financial hub and a bellwether for East African monetary conditions. Lower Kenyan rates can influence cross-border capital flows, bank pricing, and investor appetite for local-currency debt across neighbouring markets that trade and finance heavily with Kenya.

Reuters reported that most economists expected a cut, though some market voices had argued for holding rates to allow earlier reductions to filter through to the real economy. The central bank has been balancing three pressures: sustaining growth, keeping inflation expectations anchored, and ensuring the financial system continues to extend credit without weakening underwriting standards.

The policy easing comes against a backdrop of mixed risks. Kenya’s economy has posted steady growth around 5% annually, but the outlook still depends on rainfall and agricultural performance, as well as global financing conditions. Reuters noted the central bank expects economic growth of 5.5% in 2026 and 5.6% in 2027, up from an estimated 5.0% in 2025, while the current account deficit is projected to narrow to 2.2% of GDP in 2026 and 2027.

In addition, the central bank tightened the interest rate corridor around the policy rate, narrowing it from ±75 basis points to ±50 basis points, a move typically intended to improve money-market rate transmission and reduce volatility. For banks and borrowers, the key test is whether lending rates fall meaningfully, and whether credit expands into productive sectors such as manufacturing, trade, housing and small enterprise finance.

Kenya central bank rate cut: key details

Kenya central bank rate cut took the benchmark to 8.75% from 9.00%, while the central bank also narrowed its policy corridor to improve rate transmission, Reuters reported.

Next steps

Markets will watch commercial bank lending rates, credit growth data, and any guidance from the central bank on inflation risks tied to food prices, exchange-rate moves, or drought conditions that could affect supply and prices.

Why it matters

Kenya’s policy stance influences borrowing costs and investment planning in East Africa. If lower rates translate into stronger private credit, growth can strengthen; if transmission is weak, the economy may not feel the full impact.