CBK (Central Bank of Kenya) holds its Monetary Policy Committee(MPC) Meeting this Tuesday as the banking industry lobby group urge for retention of the benchmark rate at 8.75%.
The Kenya Bankers Association(KBA) through its Centre for Research on Financial Markets and Policy is leading the lobby for CBK to retain the CBR at 8.75% ahead of the MPC meeting scheduled for Tuesday 11th August 2026.
In its latest Research Note, the Centre argues that the current monetary policy stance remains appropriate, citing inflation that is firmly within the target range, resilient economic growth, improving private sector credit following earlier rate cuts, and continued stability of the Kenya shilling supported by strong foreign exchange reserves.
According to the Centre, CBK maintaining the policy rate would reinforce the recovery in private sector lending while preserving price and exchange rate stability, even as policymakers remain alert to risks from geopolitical tensions, weaker global demand and widening fiscal deficits.
The CBK top policy organ is expected to announce its decision following its meeting on 11 August 2026.
CBK Adjustment of the Benchmark Rate since February 2025
If the CBK retains the CBR at 8.75%, this will be the fourth time since February 2026. CBK begun significant cuts to the CBR at its meeting in February last year when it set the benchmark rate at 10.75% from 11.25% in December 2024. The cuts when on to 10% in April, 9.75% in June, 9.50% in August, 9.25% in October and 9.00% in December 2025.
In February, the MPC lowered the benchmark rate to 8.75% where it has been held since.
At its June 9th 2026 meeting the MPC noted that the ongoing conflict in the Middle East has disrupted global supply chains and led to a sharp increase in energy prices and transportation costs, resulting in higher inflation and moderated global growth prospects.
Additionally, the CBK top policy think tank pointed to elevated trade policy uncertainty and the Russia-Ukraine conflict as key concerns for Kenya’s economic growth going forward.
Central banks in the major economies have remained cautious and kept their policy rates unchanged as they continue to assess the impact of the conflict in the Middle East on their inflation and growth outlooks.
Kenya’s overall inflation has increased to 6.50% in July from 6.40% in June of 2026 due to higher energy prices arising from the elevated global oil prices. However, the rate has remained within the target range of 5±2.5%.
CBK maintains that overall inflation is expected to remain within the target range in the near term, assuming a de-escalation of the conflict in the Middle East. This will be supported by appropriate monetary policy actions; government interventions including subsidies and temporary reduction of VAT on fuel; expected stability in food prices due to favourable weather conditions; and a stable exchange rate.
Kenya’s economy is projected to grow at the rate of 4.9% in 2026 compared to the previous projection of 5.3%. This outlook is subject to risks, particularly a prolonged conflict in the Middle East, and elevated trade policy uncertainties.
A CEOs Survey conducted by the CBK in May 2026 indicates that chief executives expect the Kenyan economy to remain resilient over the next 12 months despite elevated global risks. This outlook is supported by favorable weather conditions that are expected to sustain agricultural production, relatively stable macroeconomic conditions, ongoing digital transformation, and seasonal factors.
This periodical survey asked the CEOs to provide their assessment on the impact of the continued geopolitical tensions, particularly the conflict in the Middle East, on business expansion and growth prospects.
In addition, CEOs were asked to identify the factors that were likely to affect business expansion/growth in the next 12 months, and to outline strategic directions and solutions to address these constraints over the medium term (May 2026 – April 2028)
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