The Central Bank of Kenya (CBK) has retained the Central Bank Rate (CBR) at 8.75 per cent following the Monetary Policy Committee (MPC) meeting held on June 9, 2026, citing rising global uncertainties and inflationary pressures linked to the ongoing conflict in the Middle East.
The Committee noted that the conflict has disrupted global supply chains, leading to sharp increases in energy prices and transportation costs. As a result, global inflation is projected to rise to 4.4 per cent in 2026 from 4.1 per cent in 2025, while global economic growth is expected to slow to 3.1 per cent from 3.4 per cent.
In Kenya, overall inflation increased to 6.7 per cent in May 2026 from 5.6 per cent in April, largely driven by higher fuel and energy costs. Core inflation also rose to 3.2 per cent from 2.8 per cent, reflecting increased transport costs, while non-core inflation surged to 16 per cent due to elevated fuel, gas, and vegetable prices.
Despite the increase, inflation remains within the government’s target range of 5±2.5 per cent. The MPC expects inflation to remain contained in the near term, supported by appropriate monetary policy measures, government fuel interventions, stable exchange rates, and favourable weather conditions expected to sustain food production.
The Committee observed that Kenya’s economic growth moderated slightly to 4.6 per cent in 2025 from 4.7 per cent in 2024, mainly due to slower expansion in agriculture and services. However, growth in the industrial sector improved significantly, supported by increased construction activity.
CBK revised Kenya’s 2026 growth forecast downward to 4.9 per cent from an earlier projection of 5.3 per cent, citing uncertainty stemming from the Middle East conflict and global trade tensions.
Meanwhile, business confidence remains positive. Surveys conducted among CEOs and market participants in March indicated optimism about economic prospects over the next year, supported by favourable weather, infrastructure investments, digital innovation, exchange rate stability, and stronger private sector credit growth.
The banking sector continued to demonstrate resilience, with strong liquidity and capital adequacy levels. Non-performing loans declined to 15.3 per cent in May from 15.6 per cent in February, while private sector credit growth improved to 9.3 percent compared to 7.1 percent in April.
Average commercial lending rates also fell to 14.5 per cent in May from 17.2 per cent recorded in November 2024, boosting access to credit for businesses and households.
The MPC concluded that maintaining the CBR at 8.75 per cent remains appropriate to anchor inflation expectations, support economic activity, and preserve exchange rate stability amid prevailing global and domestic uncertainties.