Central Bank decreases rates in June

Loosening cycle continues: At its meeting on 10 June, the Central Bank opted to lower its policy rate by a further 25 basis points to 9.75%. The decision marked the sixth straight cut in its monetary easing cycle, bringing total reductions to 325 basis points since August 2024.

Economic slowdown and muted inflation outlook lead the move: The Central Bank's decision to slash interest rates was primarily motivated by subdued inflation, which it expects will remain below the midpoint of the 2.5%–7.5% target range in the near term. Moreover, the cut aimed to stimulate lending by banks to the private sector, supporting economic activity in turn amid softening GDP growth, while ensuring inflationary expectations remain firmly anchored and the exchange rate remains stable.

Further cuts likely as growth outlook worsens: The Bank provided no explicit forward guidance. While one of our panelists sees the Bank holding rates through 2025, the others expect further cuts ranging from 25–100 basis points as annual growth is set to undershoot the Bank’s first estimates. A further deterioration in the country’s fiscal metrics presents an upside risk. The Bank will reconvene in August.

How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Kenyan interest rate projections for the next ten years from a panel of 5 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Kenyan interest rate.

Download one of our sample reports to visualize what a Consensus Forecast is and see our Kenyan interest rate projections.

Want to get access to the full dataset of Kenyan interest rate forecasts? Send an email to info@focus-economics.com.