NAIROBI, Kenya—Feb 17, 2026—The Central Bank of Kenya has lowered its benchmark lending rate by 25 basis points to 8.75 percent, signaling continued monetary easing as inflation remains contained and economic growth shows resilience.
The decision was made during the Monetary Policy Committee (MPC) meeting, chaired by Kamau Thugge.
In a statement, the MPC said inflation declined to 4.4 percent in January from 4.5 percent in December, remaining below the midpoint of the 5±2.5 percent target range. Core inflation rose slightly to 2.2 percent, while non-core inflation eased due to lower vegetable prices.
The central bank expects overall inflation to remain below the midpoint of the target band in the near term, supported by stable energy and processed food prices, as well as a steady exchange rate.
The rate cut comes as private sector credit growth continues to recover. Lending expanded by 6.4 percent in January compared to 5.9 percent in December and a contraction of 2.9 percent a year earlier. Average commercial lending rates have declined to 14.8 percent, down from 17.2 percent in November 2024.
The banking sector remains stable, with the ratio of gross non-performing loans falling to 15.5 percent in January from 17.6 percent in August 2025. The MPC noted that the revised Risk-Based Credit Pricing
Model, set to become fully operational in March, is expected to enhance the transmission of monetary policy decisions to lending rates.
Kenya’s economy grew by 4.9 percent in the third quarter of 2025, with full-year growth estimated at 5.0 percent. Growth is projected to accelerate to 5.5 percent in 2026, supported by the services and industrial sectors.
Externally, the current account deficit widened to 2.4 percent of GDP in 2025 but is projected to remain stable over the medium term. Foreign exchange reserves stood at USD 12.46 billion, equivalent to 5.37 months of import cover, providing an adequate buffer against external shocks.
To strengthen policy transmission, the MPC also narrowed the interest rate corridor around the Central Bank Rate from ±75 to ±50 basis points.
The Committee said it stands ready to take further action if necessary and will meet again in April, 2026.
