Kenya: CBK Keeps Interest Rate At 8.75pc Amid Steady Inflation, Exchange Rate

12 August 2026
Capital FM (Nairobi)
By Correspondent

Nairobi — The Central Bank of Kenya (CBK) has kept its benchmark interest rate at 8.75 percent as inflation remains within the target range.

The Monetary Policy Committee (MPC) retained the Central Bank Rate (CBR) at 8.75 percent during its meeting on Tuesday, saying the current rate was appropriate despite rising global economic risks.

Kenya's inflation rose slightly to 6.5 percent in July from 6.4 percent in June, driven mainly by higher food prices.

Prices of potatoes, tomatoes, kales, cabbages and onions remained elevated, keeping pressure on household budgets.

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However, non-core inflation eased to 15 percent in July from 15.1 percent in June, helped by lower energy prices following government interventions, including fuel subsidies and the temporary reduction of VAT on fuel.

The CBK said inflation is expected to remain within the target range in the near term, although this will depend partly on developments in the Middle East.

The ongoing conflict in the region has pushed up global energy and transport costs, with the CBK warning that a prolonged conflict could increase inflationary pressure in Kenya.

The bank expects global economic growth to slow to 3 percent this year from 3.5 percent in 2025, while global inflation is projected to rise to 4.7 percent from 4.1 percent.

Kenya's economy grew by 5.3 percent in the first quarter of 2026, up from 4.9 percent in the same period last year.

The CBK expects the economy to grow by 4.9 percent this year and 5.3 percent in 2027, although the outlook faces risks from the Middle East conflict, global trade uncertainty and possible El Niño effects.

Meanwhile, private sector credit growth remained strong at 10.2 percent in July, while average commercial bank lending rates fell to 14.3 percent from 14.4 percent in June.

The banking sector also recorded an improvement in bad loans, with the ratio of non-performing loans falling to 14.6 percent in July from 15.4 percent in April.

The MPC will next review the interest rate in October.

Read the original article on Capital FM.

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