Central Bank of Kenya Holds Lending Rate at 8.75%

The Central Bank of Kenya maintained its benchmark lending rate at 8.75% on Wednesday, marking the fourth consecutive policy meeting without a change. The decision follows a rise in year-on-year inflation, which reached 6.8% in September from 6.6% in August, though it remains within the government target range of 2.5% to 7.5%.

The bank credited government interventions, including subsidies and a temporary reduction of VAT on fuel, for mitigating inflationary pressures. Looking ahead, the bank slightly increased its 2026 economic growth forecast to 5.0% from 4.9%, though it identified the El Niño weather phenomenon as a primary risk to this outlook.

Financial projections for 2026 include a current account deficit of 3.2% of GDP, an increase from the 2.1% deficit forecast for 2025.