The Central Bank of Kenya's (CBK) Monetary Policy Committee (MPC) has announced a reduction in its benchmark rate, lowering it to 9.50 percent. This decision, made during its meeting on Tuesday, continues the CBK's policy throughout the year aimed at stimulating lending by commercial banks and bolstering overall economic activity within the country. The cut represents a 25 basis point decrease from the previous rate of 9.75 percent, which was established at the MPC's June 11 meeting.

The primary rationale cited by the committee for this rate adjustment includes a favorable inflation outlook and a positive short-term economic growth projection. Dr. Kamau Thugge, the Governor of the Central Bank of Kenya, provided a statement following the meeting, highlighting the resilience of the Kenyan economy. He noted that recently released Gross Domestic Product (GDP) data for the first quarter of 2025 indicated a robust growth rate of 4.9 percent in real GDP.

This impressive economic performance, as elaborated by Governor Thugge, was largely a reflection of the strong showing in the agricultural sector, alongside a significant recovery in industrial activity, particularly within the construction industry. Furthermore, leading indicators of economic activity suggest an improved performance is anticipated for the second quarter of 2025. The positive trend extends to the financial sector as well, with growth in commercial banks’ lending to the private sector continuing to show improvement. This lending stood at 3.3 percent in July 2025, marking an increase from 2.2 percent recorded in June, further supporting the central bank's efforts to invigorate the economy.