Kenya Interest Rate

Central Bank leaves rates unchanged in June

Bank extends hold: At its meeting on 9 June, the Central Bank of Kenya (CBK) decided to maintain its policy rate at 8.75%. This marks the second consecutive hold after 10 straight cuts totaling 425 basis points since August 2024.

Geopolitical uncertainty underpins decision: The Bank favored a hold largely due to the uncertainty triggered by the war in the Middle East. Regarding price pressures, the CBK noted that while headline inflation increased considerably in May compared to April, it remained within the 2.5–7.5% target band. This, coupled with the Bank’s expectation that average inflation will remain within the target range, made a rate hike unnecessary. On the flipside, a cut wasn’t warranted, as the economy continues to expand at a robust pace.

Panelists split on outlook: The Central Bank did not provide explicit forward guidance but hinted at a wait-and-see approach regarding future interest rate changes. Our panelists have turned more hawkish, with a small majority now expecting the CBK to hike the policy rate this year. The remainder expect the Bank to stand pat through the end of 2026. Consequently, our Consensus is for a slight increase in the policy rate this year. The CBK 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 6 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.

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