The Central Bank of Kenya (CBK) has lowered its benchmark lending rate to 9.75 percent, stepping up efforts to make loans more affordable and energize the economy. This is the first time in two years that the rate has returned to single digits, signaling a turning point in the country’s monetary policy.

Announced on June 10, 2025, the 25 basis point cut – down from 10 percent – comes as part of CBK’s broader strategy to support private sector lending and ease the cost of credit. It also marks the sixth consecutive reduction by the bank’s Monetary Policy Committee (MPC), showing a clear commitment to steering Kenya toward sustained economic recovery.

The last time the Central Bank Rate (CBR) stood below 10 percent was in June 2023, when it hit 9.5 percent. Since then, the rate had climbed steadily as the CBK fought to contain inflation and stabilize the Kenyan shilling. Now, with key economic indicators improving, the regulator has shifted gears to promote growth.

CBK Governor Kamau Thugge said the decision to ease the policy was influenced by a need to stimulate economic activity, reduce inflationary pressures, and align with the global trend of rate cuts by other central banks.

“The committee concluded that there was scope for a further easing of the monetary policy stance to augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity, while ensuring inflationary expectations remain firmly anchored, and the exchange rate remains stable,” Thugge said.

CBK’s move appears to be paying off. According to the latest data, private sector lending grew by 2 percent in May 2025 – up from 0.4 percent in April and a sharp reversal from -2.9 percent in January. Thugge attributed this to stronger credit demand and the reduced impact of foreign exchange volatility following the Kenyan shilling’s recent appreciation.

Meanwhile, average lending rates from commercial banks have also dropped, falling to 15.4 percent in May, compared to 15.7 percent in April and 17.2 percent in November 2024.

The consistent decline in borrowing costs highlights the central bank’s success in making credit more accessible. With commercial banks adhering to CBK guidelines and interest rates easing, businesses and individuals alike can expect a more favorable lending environment in the months ahead.