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. It cites inflation that is firmly within the target range. The resilient economic growth, improving private sector credit has been a result of earlier rate cuts. The Kenya Shilling exchange rate remain stable due to strong forex reserves.
CBK urged to retain the benchmark rate to enable recovery of private sector lending
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 in Recent Months
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.
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. This has led to a sharp increase in energy prices and transportation costs. The result has been higher inflation.
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 kept their policy rates unchanged as they assess the impact of the Middle East conflict.
Kenya’s overall inflation has increased to 6.50% in July from 6.40% in June of 2026. This was 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 observations made at the last MPC meeting in June 2026
CBK maintains that overall inflation is expected to remain within the target range in the near term. This is assuming that ongoing conflict in the Middle East ends. This will be supported by appropriate monetary policy actions.
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.
The CBK foreign exchange reserves currently stand at US$ 13,203 million or 5.6 months of import cover. The reserves continue to provide adequate cover against short-term domestic and external shocks.
At the last meet, the Committee concluded the Central Bank Rate unchanged at 8.75 percent. This remains appropriate to ensure inflation and exchange rate stability.
