Central Bank holds its rate at 8.75 per cent. Loans should not get dearer because of it, but prices are rising faster and banks are already charging a little more
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Central Bank holds its rate at 8.75 per cent. Loans should not get dearer because of it, but prices are rising faster and banks are already charging a little more.
The Central Bank of Kenya has kept its main interest rate at 8.75 per cent. The Monetary Policy Committee (MPC), which sets the rate, met on Wednesday 7 October and decided to leave it alone.
The Central Bank Rate is the starting point banks use when they price loans. A hold means this decision gives banks no new reason to raise what they charge. The rate has not moved since it was last cut in February, according to.
The numbers the committee looked at
Inflation: 6.8 per cent in September, up from 6.6 per cent in August. The Central Bank's target range is 2.5 to 7.5 per cent, so it is still inside, but near the top.
What is pushing prices up: processed foods such as milk, wheat products and cooking oil. Core inflation, which leaves out the most changeable food and fuel prices, rose to 4.0 per cent from 3.4 per cent.
What is easing: vegetable prices and energy prices. Non-core inflation fell to 14.0 per cent from 14.7 per cent.
Bank loans: the average lending rate was 14.4 per cent in September, up from 14.3 per cent in August. It was 17.2 per cent in November 2024.
Bad loans: 13.9 per cent of all loans in September, down from 14.8 per cent in June.
Lending to businesses and households: growing at 10.6 per cent a year, up from 10.3 per cent in August.
Economic growth: 4.6 per cent in 2025. The forecast for 2026 was raised to 5.0 per cent from 4.9 per cent. The forecast for 2027 stays at 5.3 per cent.
Dollar reserves: 14.7 billion US dollars, enough to pay for 5.9 months of imports.
The shilling: the Central Bank's rate on Friday 9 October was Sh129.91 to the US dollar.
Why it held
The committee said the current rate is enough to keep inflation inside the target range and the shilling stable. It pointed to government measures, including subsidies and the temporary cut in VAT on fuel, as helping to hold prices down.
It also listed what could go wrong: higher oil prices because of the conflict in the Middle East, a long period of global tension, uncertainty over trade rules, and a possibly severe El Niño. It said it "stands ready to take further action as necessary".
Money is also leaving the country faster than a year ago. The gap between what Kenya earns abroad and what it spends abroad widened to 3.1 per cent of the economy in the year to August, from 2.1 per cent. Imports of goods rose 15.8 per cent and exports 11.8 per cent. Money sent home by Kenyans abroad fell 1.3 per cent.
What it means for you
If you have a bank loan with a rate that can change, this decision does not push your instalment up.
If you are about to borrow, compare offers. The average rate is 14.4 per cent, but banks price each customer differently.
If you save in a bank, the average deposit rate was 6.91 per cent in August, about level with inflation. Money in an ordinary savings account, at an average of 3.54 per cent, is losing value.
Milk, cooking oil and wheat products such as flour and bread are where the pressure is. Vegetables have been getting cheaper.
The next test for prices is EPRA's fuel review on Wednesday 14 October. The next interest rate decision is in December.
Sources: Central Bank of Kenya (MPC press release of 7 October); Central Bank of Kenya (exchange, deposit and savings rates);.
That was a Kibra News Network report, read by an A I voice.
The Central Bank of Kenya has kept its main interest rate at 8.75 per cent. The Monetary Policy Committee (MPC), which sets the rate, met on Wednesday 7 October and decided to leave it alone.
The Central Bank Rate is the starting point banks use when they price loans. A hold means this decision gives banks no new reason to raise what they charge. The rate has not moved since it was last cut in February, according to Kenyans.co.ke.
The numbers the committee looked at
Inflation: 6.8 per cent in September, up from 6.6 per cent in August. The Central Bank’s target range is 2.5 to 7.5 per cent, so it is still inside, but near the top.
What is pushing prices up: processed foods such as milk, wheat products and cooking oil. Core inflation, which leaves out the most changeable food and fuel prices, rose to 4.0 per cent from 3.4 per cent.
What is easing: vegetable prices and energy prices. Non-core inflation fell to 14.0 per cent from 14.7 per cent.
Bank loans: the average lending rate was 14.4 per cent in September, up from 14.3 per cent in August. It was 17.2 per cent in November 2024.
Bad loans: 13.9 per cent of all loans in September, down from 14.8 per cent in June.
Lending to businesses and households: growing at 10.6 per cent a year, up from 10.3 per cent in August.
Economic growth: 4.6 per cent in 2025. The forecast for 2026 was raised to 5.0 per cent from 4.9 per cent. The forecast for 2027 stays at 5.3 per cent.
Dollar reserves: 14.7 billion US dollars, enough to pay for 5.9 months of imports.
The shilling: the Central Bank’s rate on Friday 9 October was Sh129.91 to the US dollar.
Why it held
The committee said the current rate is enough to keep inflation inside the target range and the shilling stable. It pointed to government measures, including subsidies and the temporary cut in VAT on fuel, as helping to hold prices down.
It also listed what could go wrong: higher oil prices because of the conflict in the Middle East, a long period of global tension, uncertainty over trade rules, and a possibly severe El Niño. It said it “stands ready to take further action as necessary”.
Money is also leaving the country faster than a year ago. The gap between what Kenya earns abroad and what it spends abroad widened to 3.1 per cent of the economy in the year to August, from 2.1 per cent. Imports of goods rose 15.8 per cent and exports 11.8 per cent. Money sent home by Kenyans abroad fell 1.3 per cent.
What it means for you
If you have a bank loan with a rate that can change, this decision does not push your instalment up.
If you are about to borrow, compare offers. The average rate is 14.4 per cent, but banks price each customer differently.
If you save in a bank, the average deposit rate was 6.91 per cent in August, about level with inflation. Money in an ordinary savings account, at an average of 3.54 per cent, is losing value.
Milk, cooking oil and wheat products such as flour and bread are where the pressure is. Vegetables have been getting cheaper.
The next test for prices is EPRA’s fuel review on Wednesday 14 October. The next interest rate decision is in December.
KNN Newsroom is the staff byline for stories written, rewritten and edited at the Kibra News Network desk. Where a story credits an outside outlet, the original source is linked at the foot of the piece.
