Central Bank of Kenya. Photo | courtesy.
The Central Bank of Kenya (CBK) has issued a clarification on its recent consultative paper reviewing the Risk-Based Credit Pricing Model, following public feedback from over 40 stakeholders, including commercial banks, financial institutions, consultancy firms, academia, and industry associations.
In a press release dated May 13, 2025, CBK stated that the paper, released in April 2025, does not propose the reintroduction of interest rate caps.
It also clarified that the bank does not intend to abandon its current monetary policy implementation framework, which relies on the interbank rate as the operational target.
The central bank reaffirmed its commitment to refining the country’s credit market.
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As part of its ongoing monetary reforms, CBK has narrowed the interest rate corridor around the Central Bank Rate (CBR) from ±150 basis points to ±75 basis points.
This adjustment, according to CBK, has strengthened the interbank rate’s stability and better aligned it with the CBR.
Additionally, the interest rate on the Discount Window has been revised from 300 basis points to 75 basis points above the CBR, aligning it with the upper bound of the interest rate corridor.
CBK emphasized that it will continue engaging stakeholders in creating a transparent, accessible, and efficient credit market, aiming to boost credit access for the private sector and spur economic growth for all Kenyans.
