Kenyans can expect to continue accessing more affordable loans over the next two months after the Central Bank of Kenya (CBK) slashed the base lending rate for the fifth time in a row since August last year.
In its Monetary Policy Committee (MPC) statement released on Tuesday, April 8, the CBK announced a reduction in the base lending rate by 75 basis points—from 10.75% to 10.00%.
CBK Governor Kamau Thugge explained that the move is aimed at encouraging banks to increase lending to the private sector, boosting economic activity while maintaining stability in the exchange rate.
Thugge noted that the global economy has been steadily recovering since 2024, largely due to strong growth in the United States and key emerging markets like India.
While testifying before the National Assembly’s Finance and National Planning Committee on March 25, 2025, Thugge shared that global headline inflation had eased, though uncertainties remain, particularly due to the risk of rising import tariffs.
He also pointed out that major central banks around the world were lowering interest rates, though the pace differed depending on domestic inflation and growth projections.
The CBK also highlighted that global oil prices had come down due to increased output and reduced demand. However, volatility risks remain high due to geopolitical tensions and heightened import tariffs.
On the local front, Thugge noted that food inflation had declined thanks to lower prices of cereals and sugar, although inflation on edible oils remained high.
Kenya’s overall inflation rate stood at 3.6% in March 2025, slightly up from 3.5% in February, but still within the target range of 5% ± 2.5%. Lower inflation in energy and utility costs continued to ease pressure on non-core inflation, largely driven by reduced electricity and fuel prices.
Thugge added that inflation is expected to stay below the mid-point of the target range in the short term, supported by low core inflation, stable food and energy prices, and a firm exchange rate.
Looking ahead, the CBK forecasts economic growth will accelerate in 2025, with GDP projected to rise by 5.4%, buoyed by strong performance in key service and agricultural sectors.
He concluded by affirming that the CBK would keep a close eye on the economy and global trends, and is prepared to adjust policy as needed to fulfill its mandate.
