NAIROBI, Oct 7 – The Central Bank of Kenya (CBK) kept its benchmark interest rate unchanged at 8.75% on Wednesday, maintaining its policy stance for a fourth consecutive meeting as inflation moved closer to the upper end of its target range.
The decision leaves the Central Bank Rate at 8.75%, where it has remained since the February 2026 cut. CBK’s latest published rate data confirm the benchmark remains at that level.
Kenya’s annual inflation rose to 6.8% in September, from 6.6% in August, according to the Kenya National Bureau of Statistics. The increase was driven primarily by higher prices for food and non-alcoholic beverages, transport, and housing, water, electricity, gas and other fuels.
Despite the recent increase, inflation remains within the government’s preferred 2.5% to 7.5% range. The central bank said inflation was expected to remain within its target range in the near term, supported partly by government measures aimed at limiting price pressures.
“Government interventions, including subsidies and the temporary reduction of VAT on fuel, continue to mitigate inflationary pressures,” the central bank said.
The decision represents the latest pause in the easing cycle that began earlier in 2026. CBK cut its benchmark rate to 8.75% in February and subsequently maintained it at the same level in April, June and August.
Growth Outlook Improves
Alongside its rate decision, the central bank marginally raised its 2026 economic growth forecast to 5.0%, from its previous projection of 4.9%.
However, the growth outlook remains exposed to weather-related risks. The bank identified the El Niño weather phenomenon as a key potential risk to economic activity, particularly through its effects on agriculture and food prices.
The central bank also expects Kenya’s current-account deficit to widen to 3.2% of GDP in 2026, compared with 2.1% in 2025.
The latest policy decision comes as the economy balances stronger growth prospects against rising food and transport costs. September inflation reached 6.8%, with food inflation at 9.5% and transport inflation at 15.6%, according to official statistics.
For now, the CBK is maintaining its focus on keeping inflation expectations anchored while allowing the lower interest-rate environment to continue supporting economic activity and private-sector credit.
