NAIROBI, Kenya, June 9 – The Central Bank of Kenya (CBK) has retained its benchmark lending rate at 8.75 percent, citing rising inflation linked to higher global energy prices while noting continued stability in the foreign exchange market and banking sector.
The decision was made by the Monetary Policy Committee (MPC) during its meeting on June 9.
CBK said inflation rose to 6.7 percent in May 2026 from 5.6 percent in April, largely driven by increased fuel and energy costs following disruptions to global supply chains caused by the conflict in the Middle East. Despite the increase, inflation remains within the government’s target range of 2.5 percent to 7.5 percent.
Core inflation, which excludes volatile food and energy prices, rose to 3.2 percent from 2.8 percent, while non-core inflation increased to 16 percent from 13.4 percent due to higher fuel, gas and vegetable prices.
The central bank expects inflation to remain within the target range in the coming months, supported by government measures such as temporary fuel tax reductions, favourable weather conditions and exchange rate stability.
The MPC also revised Kenya’s economic growth forecast for 2026 to 4.9 percent, down from an earlier projection of 5.3 percent, citing uncertainty arising from global geopolitical tensions and elevated energy prices.
Kenya’s economy expanded by 4.6 percent in 2025 compared to 4.7 percent in 2024, with growth slowing in the agriculture and services sectors, although industrial activity strengthened.
The banking sector remained stable, according to CBK, with private sector credit growth accelerating to 9.3 percent in May from 7.1 percent in April. Lending rates continued to decline, averaging 14.5 percent compared to 17.2 percent in November 2024.
The ratio of non-performing loans also improved, falling to 15.3 percent in May from 17.6 percent in August 2025.
Kenya’s foreign exchange reserves stood at $13.2 billion, equivalent to 5.6 months of import cover, providing a buffer against external shocks.
CBK said it will continue monitoring developments in global oil markets and their impact on inflation before its next policy review scheduled for August 2026.
