Economic experts predict the Central Bank of Kenya (CBK) will reduce lending rates further, potentially making loans and mortgages more affordable for Kenyan citizens before the next policy meeting.
According to specialists, diminishing inflation and a more stable global commodities market have provided the opportunity for authorities to decrease borrowing expenses, continuing a pattern initiated the previous year. This reduction would result in decreased interest rates for individual loans, business financing, and home mortgages.
Market analysts monitoring African economies indicate that Kenya is among several nations anticipated to lower interest rates at the beginning of the year as price pressures continue to decelerate. Other economies such as Egypt, Nigeria, and Zambia are also expected to reduce borrowing costs, though central banks are predicted to proceed cautiously as easing cycles approach their conclusion, according to Bloomberg.
Emerging markets strategist Gergely Urmossy has forecast that Kenya might experience an additional 25-basis-point decrease, noting that domestic inflation trends support monetary easing, despite global investor sentiment remaining a significant risk factor. Kenya’s current benchmark rate is 9 percent.
Economists additionally contend that a lower policy rate directly impacts what Kenyans pay on loans since commercial banks utilize the Central Bank Rate (CBR) as a reference point when determining credit pricing. Any reduction, therefore,
These expectations follow CBK’s decision in December of last year to decrease the Central Bank Rate by 25 basis points from 9.25 percent to 9 percent during a Monetary Policy Committee (MPC) meeting held on December 9, 2025. This reduction marked the ninth consecutive rate decrease by the regulatory body.
“The Monetary Policy Committee decided to lower the Central Bank Rate to 9.00 percent from 9.25 percent,” CBK stated at that time, indicating relief for households and enterprises dealing with elevated borrowing costs.
At that moment, CBK attributed the decision to decreasing inflationary pressures and a favorable global environment, noting that several major central banks had started carefully loosening monetary policy amid inconsistent growth and inflation forecasts.
The regulatory body also mentioned decreasing international oil prices, supported by increased production and reduced global demand, which has helped manage domestic inflation, although volatility continues due to global uncertainties.
Analysts suggest these elements bolster the case for another rate reduction when the MPC convenes again in February, provided inflation remains .
Nevertheless, CBK has cautioned that risks persist, including unfavorable weather conditions, trade policy uncertainty, and continuing geopolitical tensions, which could affect inflation patterns and restrict the pace of further easing.
Despite this, economists assert that any additional cut, regardless of size, would stimulate consumer spending and promote economic growth.