Central Bank of Kenya. Photo | courtesy.
Banks now urge the Central Bank of Kenya (CBK) to lower its base rate to make borrowing cheaper and help businesses get more loans.
In recent months, lending to the private sector has been slow and many banks say this needs to change.
Commercial banks believe that low inflation, a stable Kenyan shilling, and weak private sector lending are good reasons for the Central Bank to cut the rate.
The Kenya Bankers Association (KBA) said that prices are stable, the currency is holding strong, and businesses are still finding it hard to get credit. They want action to help the economy grow again.
“Overall inflation remains low, and inflation expectations in the short to medium term are anchored within the target range. The Kenyan shilling remains stable, supported by strong foreign exchange reserves, resilient remittances, a stable current account deficit and ensuing favourable interest rate differentials with the recent Federal Reserve rate cut,” KBA said in a research note.
“In view of these developments, we opine that there is scope to cut the Central Bank Rate (CBR) to provide impetus for a stronger private sector credit growth and anchor economic growth.”
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The KBA shared this note before the Central Bank’s Monetary Policy Committee meeting on October 7. This group has already reduced the base rate in its last seven meetings. In August, it went down to 9.5 percent from 9.75 percent.
KBA believes that another cut will make loans cheaper and attract more people to borrow. Credit to the private sector grew by 3.3 percent in August which is the fastest in half a year.
However the Central Bank says lenders are slow to lower loan rates. Most banks remain careful because of rising unpaid loans, which reached 17.6 percent by June 2025.
