The Central Bank of Kenya has cut its base lending rate for the tenth consecutive time, reducing it by 25 basis points to 8.75 percent, in a move expected to lower the cost of loans for borrowers.

On Tuesday, CBK's Monetary Policy Committee reduced the benchmark lending rate to 8.75 percent from 9.00 percent set in December last year. The banking sector regulator said the move is calibrated to spur lending especially to Kenya's private sector.

"Growth in commercial banks' lending to the private sector continued to improve and stood at 6.4 percent in January 2026 compared to 5.9 percent in December 2025. Growth in credit to key sectors of the economy, particularly building and construction, trade and consumer durables, remained strong in January, reflecting improved demand for credit," the CBK stated.

"Decreases in non performing loans were noted in the real estate, manufacturing, trade, building and construction, and personal and household sectors," CBK's Monetary Policy Committee noted. 

The downward revision of the key lending rate was also informed by easing in Kenya's inflation which reduced marginally to 4.4 percent in January from a higher 4.5 percent in December 2025 according to the Kenya National Bureau of Statistics data.

“The CBK seemingly wants to do all it can, while it can, to drive faster growth (& cheaper financing),” Razia Khan, chief Africa and Middle East economist at Standard Chartered Bank told Reuters.

While announcing the ease in cost of loans, the CBK projected that Kenya's economy will expand by 5.5 percent this year, reflecting a slight jump from the 5.0 percent posted in 2025.

At the same time, the CBK approved narrowing of the interest rate corridor around the Central 

Bank Rate from the current ±75 basis point to ±50 basis points. "This will further support the alignment of the Kenya Shilling Overnight Interbank Average to teh CBR," the banking sector regulator explained. 

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