CBK Holds Lending Rate Steady as Global Tensions Threaten Economic Stability
Borrowers in Kenya have received a measure of relief after the Central Bank opted to hold its benchmark lending rate steady, even as global economic uncertainty continues to intensify.
In a statement released following its April 8, 2026 meeting, the Monetary Policy Committee (MPC) announced that it would maintain the Central Bank Rate (CBR) at 8.75 per cent. The decision, policymakers said, reflects confidence in the country’s stable inflation outlook and resilient economic performance.
“The Monetary Policy Committee decided to maintain the Central Bank Rate (CBR) at 8.75 per cent. The Committee noted that overall inflation remained below the mid-point of the target range, supported by stable core inflation, favourable weather conditions, and a broadly stable exchange rate,” the Central Bank said.
The move comes at a delicate time for the global economy, which is facing renewed pressure following escalating tensions in the Middle East. The conflict has disrupted supply chains and driven up international energy prices, raising concerns about inflation and slowing global growth.
According to the Central Bank, global growth had initially been projected at 3.3 per cent for 2026 but is now expected to ease due to reduced demand and rising costs linked to higher oil prices. Ongoing geopolitical tensions, including the protracted Russia-Ukraine war and heightened trade policy uncertainty, were also flagged as significant downside risks.
Despite these external pressures, Kenya’s inflation has remained relatively contained. Data shows that overall inflation stood at 4.4 per cent in March 2026, a slight increase from 4.3 per cent recorded in February. This places inflation comfortably within the Central Bank’s target range of 5±2.5 per cent.
Core inflation, which excludes volatile items, remained stable at 2.1 per cent, largely supported by lower prices of key processed food commodities such as sugar and maize flour. However, non-core inflation rose to 10.8 per cent from 10.1 per cent, driven by increases in the cost of perishable goods including tomatoes and Irish potatoes.
Even so, the Central Bank expressed confidence that inflation would remain within the target band in the near term, citing favourable weather conditions and exchange rate stability.
Kenyan Economy Shows Resilience Amid Global Risks
The Central Bank also painted a largely positive picture of the domestic economy, noting that Kenya’s economic growth remained robust despite external headwinds.
Real GDP growth was estimated at 5.0 per cent in 2025, up from 4.7 per cent in 2024, supported by a recovery in the industrial sector, continued strength in services, and stable agricultural output.
Looking ahead, growth is projected at 5.3 per cent in 2026, slightly revised down from an earlier forecast of 5.5 per cent. The adjustment reflects emerging risks linked to global geopolitical tensions and rising energy costs.
Survey data from key sectors further reinforced cautious optimism. Agricultural stakeholders expect stable food prices due to favourable weather patterns, although concerns remain over the impact of higher global oil prices on inflation.
Meanwhile, business sentiment remained broadly positive, according to the Central Bank’s March 2026 CEOs Survey and Market Perceptions Survey. However, respondents highlighted persistent challenges, including global uncertainty, high operating costs, and subdued consumer demand.
The Central Bank’s latest decision underscores a careful balancing act—supporting economic growth while remaining vigilant against mounting global risks that could yet derail stability.
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CBK Holds Lending Rate Steady as Global Tensions Threaten Economic Stability