The Central Bank of Kenya reduced its central bank rate by 25 basis points to 9.00% at its Monetary Policy Committee meeting on 9 December 2025, extending the most prolonged easing cycle in the bank's recent history. The decision, published in the MPC's press release, marks the ninth consecutive cut since the CBK began reducing rates from the 2024 peak, with cumulative easing now standing at 375 basis points.
CBK Governor Kamau Thugge indicated in the accompanying statement that the Committee expected further easing to support private sector lending, providing forward guidance that suggests the rate reduction cycle is not yet considered complete. The governor's commentary points to the MPC's view that monetary conditions remain restrictive enough to warrant continued adjustment, even as the policy rate approaches levels associated with more neutral territory relative to Kenya's economic fundamentals.
THE EASING CYCLE IN CONTEXT
The 375 basis points of cumulative easing delivered since the 2024 peak represents one of the largest reduction cycles undertaken by the CBK in recent memory. The tightening phase that preceded it was itself a response to inflation pressures and currency weakness that pushed Kenyan monetary conditions to their most restrictive stance in a number of years. The shift to easing reflected a judgement by the MPC that those pressures had sufficiently abated to allow attention to turn to growth and credit conditions.
Private sector credit growth in Kenya has been a concern for the MPC in recent periods. Commercial banks' lending rates remained elevated well above policy rate levels, constrained by high non-performing loan ratios in some sectors and by the credit risk assessments that banks apply when extending loans to small and medium-sized enterprises. Governor Thugge's reference to supporting private sector lending directly acknowledges the role that monetary easing plays in creating the conditions for banks to reduce their own lending rates and expand credit availability.
The 25-basis-point increment chosen for this cut is consistent with the measured pace the CBK has maintained across the easing cycle, reflecting a preference for gradual adjustment. Each cut has been sized to allow the MPC to assess the transmission of previous reductions before committing to further action, a cautious approach suited to an environment where both domestic and external conditions have remained in flux.
IMPLICATIONS FOR KENYAN BANKS AND BORROWERS
For commercial banks in Kenya, the ninth consecutive rate cut continues the repricing pressure on their asset books. Banks with significant volumes of loans linked to benchmark rates — or that are adjusting their standard lending rates in response to competitive pressure — will need to balance the impact on their net interest margins against the opportunity to stimulate loan demand by making credit more affordable.
Borrowers in the mortgage, business lending, and consumer credit segments stand to benefit from lower rates if commercial banks pass the CBK reduction through to their own pricing. The pace and completeness of that transmission has varied across the easing cycle, with some lenders responding more quickly than others depending on their funding structures and strategic priorities.
Kenya's broader economic environment — including its fiscal position, exchange rate dynamics, and the performance of key sectors such as agriculture and tourism — will continue to shape the MPC's deliberations at future meetings. Governor Thugge's guidance that further easing is under consideration sets expectations for the market, but the CBK has consistently emphasised that each decision will be made on the basis of incoming data rather than a fixed predetermined path.