Kenya Interest Rate

The Central Bank of Kenya cut its benchmark interest rate by another 50 bps to 10.75% at its meeting on February 5th, 2025, marking the fourth consecutive rate reduction. Governor Kamau Thugge explained that the Monetary Policy Committee (MPC) decided to lower the rate as inflation is expected to stay below the 5% midpoint of the central bank’s target range in the near term, supported by stable core inflation, low energy prices, and exchange rate stability. Kenya’s inflation rate remained comfortably below the 5% target for the eighth consecutive month, registering 3.3% in January. Core inflation, which strips out food and energy, slowed to 2%, from 2.2% in December, suggesting muted demand. The bank also lowered the cash reserve ratio by 100 basis points to 3.25% to promote lower lending rates and stimulate economic activity.