CBK Cuts Lending Rate to 9.25% to Boost Cheaper Loans

The Central Bank of Kenya has lowered the Central Bank Rate (CBR) to 9.25 percent from 9.50 percent. The decision was made on Wednesday during a meeting by the Monetary Policy Committee.

“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, during its meeting held on October 7, 2025,” the MPC report reads in part.

The move is a relief for Kenyans seeking loans since commercial banks use the CBR to determine the lending rate.

Kenya’s inflation slightly went up to 4.6 percent in September from 4.5 percent in August, staying within the government’s target range.

The Central Bank of Kenya said core inflation, which tracks prices of most goods and services, dropped to 2.9 percent from 3.0 percent the previous month because processed food like maize flour became cheaper.

However, non-core inflation rose to 9.6 percent from 9.2 percent, pushed by higher prices of vegetables such as tomatoes, carrots, onions and cabbages.

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The Central Bank’s positive outlook comes from better farm harvests helped by good weather, a strong economy with low inflation and a steady exchange rate, falling interest rates, and steady growth in tourism and the digital economy.

The bank added that stable fuel prices and a steady exchange rate are expected to keep inflation under control in the coming months.

The decision to reduce the CBR comes at the backdrop of calls from banks to CBK to reduce it, in order to make borrowing cheaper and help businesses get more loans. 

Kenya Bankers Association (KBA) cited stable prices and currency strength as reasons for the cut, arguing that businesses find it hard to access credit due to high lending rates.