CBK(Central Bank of Kenya) Monetary Policy Committee (MPC) decided to maintain the Central Bank Rate (CBR) at 8.75 percent, during its meeting held on April 8, 2026.
During its deliberations, the CBK noted that the conflict in the Middle East has disrupted global supply chains, leading to significantly higher energy prices and heightened risks to the global economic outlook.
Central banks in the major economies have kept their policy rates unchanged as they assess the impact of the conflict on their inflation and growth outlooks. International oil prices have risen sharply and remained volatile due to supply chain disruptions and elevated uncertainties attributed to the conflict.
Food inflation has increased modestly, mainly driven by higher inflation rates for edible oils and cereals prices.
Kenya’s overall inflation stood at 4.4% in March 2026 compared to 4.3% in February, and remained below the mid-point of the target range of 5±2.5 percent.
CBK maintains that Inflation to remain within target range
Despite expected upward pressure from higher energy prices, CBK maintains that overall inflation is expected to remain within the target range in the near term, supported by appropriate monetary policy actions, expected stability in food prices attributed to favourable weather conditions, and a broadly stable exchange rate.
The Kenyan economy remained resilient in 2025, with real GDP growth estimated at 5.0 percent compared to 4.7 percent in 2024, supported by a rebound of the industrial sector, resilience of the services sector, and stable agriculture sector growth.
Leading indicators of economic activity point to continued resilient performance in the first quarter of 2026. The growth of the economy is projected at 5.3 percent in 2026 compared to the previous projection of 5.5 percent, reflecting the emerging risks of the conflict in the Middle East on the performance of some key sectors of the economy. This outlook is subject to risks, particularly a prolonged conflict in the Middle East, and elevated trade policy uncertainties.
Respondents to the March 2026 Agriculture Sector Survey expect stable food prices attributed to favourable weather conditions, and stability in exchange rate, to contribute to a stable inflation rate in the near term.
A majority of respondents to the February Survey had expected inflation to decline or remain unchanged on account of lower food prices due to favourable weather conditions. These expectations changed in the March Survey with most respondents expecting some upward pressure on inflation due to higher international oil prices attributed to the conflict in the Middle East.
The CBK led CEOs Survey and Market Perceptions Survey conducted in March 2026 revealed sustained optimism about business activity and economic growth prospects for the next 12 months. The optimism was attributed to the stable macroeconomic environment with low inflation and stable exchange rate, lower interest rates, expected favourable weather conditions which are expected to support agriculture, increased infrastructure spending, increased digital innovations, and improved private sector credit growth. Nevertheless, respondents expressed concerns about increased global uncertainties attributed to the conflict in the Middle East. Diaspora remittances increased by 1.9%.
CBK Foreign Exchange Reserves
The CBK foreign exchange reserves currently stand at US$13,354 million (5.68 months of import cover) and continue to provide adequate cover and a buffer against short-term domestic and external shocks.
Growth in credit to key sectors of the economy, particularly building and construction, trade, agriculture, and consumer durables remained strong, reflecting improved demand for credit in line with the declining lending interest rates. Average commercial banks’ lending rates stood at 14.7 percent in March 2026, down from 14.8 percent in February 2026 and 17.2 percent in November 2024.
The CBK said its think tank will closely monitor the impact of this policy decision, the evolution and impact of the conflict in the Middle East, as well as other developments in the global and domestic economies, and stands ready to take further action as necessary in line with its mandate.
The Committee will meet again in June 2026.
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