Central Bank Slashes CBR to 9.25% Amid Inflation Stability

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Central Bank Slashes CBR to 9.25% Amid Inflation Stability

Kenyans will get cheaper loans after the Central Bank of Kenya (CBK) cut its lending rate.

Following the Monetary Policy Committee (MPC) meeting on October 7, 2025, the CBK reduced the Central Bank Rate (CBR) by 25 basis points to 9.25% from 9.50%.

“The Monetary Policy Committee (MPC) decided to lower the Central Bank Rate (CBR) by 25 basis points to 9.25 percent from 9.50 percent,” read the committee’s statement.

Loans and mortgages will be cheaper for individuals and businesses as commercial banks use the CBR as a benchmark for their lending rates.

Inflation Stable and Conditions Improving

CBK data shows that Kenya’s overall inflation was 4.6% in September 2025, up slightly from 4.5% in August, but still within the government’s target range of 5% ± 2.5%.

Core inflation, which excludes food and energy prices, was 2.9% in September from 3.0% in August due to lower prices of processed food items like maize flour.

Non-core inflation rose to 9.6% in September from 9.2% in August due to higher prices of vegetables like tomatoes, onions, carrots and cabbage.

However, CBK says inflation will remain contained in the near term due to stable energy prices and exchange rate stability.

“Overall inflation is expected to remain below the midpoint of the target range in the near term, supported by stable energy prices and exchange rate stability,” the statement added.

Economy Looking Up

CBK is optimistic about the economy citing improved agricultural output, good weather and stable macroeconomic environment.

It also highlighted the resilience of the tourism and digital sectors which are supporting economic recovery.

“The optimism was due to improved agricultural production supported by good weather, stable macroeconomic environment with low inflation and exchange rate stability, declining interest rates and resilience of tourism and digital economy,” the MPC noted.

**Future Policy DirectionsThe MPC also announced plans to increase transparency and ensure commercial banks align with the rate changes.

To do this, the CBK said the Risk-Based Credit Pricing (RBCP) model — which is designed to improve the transmission of monetary policy decisions — will be fully in place by March 2026.

Once in place, the model will make loan pricing more fair and responsive to policy changes and borrowers will benefit more from rate cuts.

The MPC reiterated its commitment to financial stability while promoting economic growth and affordable credit.

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Central Bank Slashes CBR to 9.25% Amid Inflation Stability