Nairobi — The Central Bank of Kenya (CBK) has cut its benchmark lending rate by 25 basis points to 9 percent, marking its second consecutive move to ease borrowing costs as the economy shows signs of stabilising.

The Monetary Policy Committee (MPC) said the adjustment was informed by easing inflation, improving private-sector credit uptake and a stable exchange rate.

"The Committee concluded that there was scope for a further easing of the monetary policy stance by reducing the CBR by 25 basis points," the MPC said.

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"This will augment previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity."

Kenya's overall inflation fell to 4.5 percent in November, remaining below the 5 percent midpoint of the CBK's 2.5 percent range on either side.

Core inflation also eased, supported by lower processed food prices, while non-core inflation edged up due to higher vegetable prices.

The economy posted resilient growth in the first half of 2025, averaging 4.9 percent, with the CBK projecting expansion to rise to 5.2 percent in 2025 and 5.5 percent in 2026.

The rate cut comes against the backdrop of rising optimism among CEOs and market players who cited stable inflation, a steady shilling, favourable weather and declining interest rates as key drivers of confidence.

Private-sector credit growth continued to improve, reaching 6.3 percent in November compared to 5.9 percent in October and a contraction earlier in the year.

Lending rates have also eased to an average of 14.9 percent, down from 17.2 percent a year earlier.

The CBK said it will closely monitor the impact of the rate cut and stands ready to act further if needed ahead of its next MPC meeting scheduled for February 2026.