Central Bank of Kenya’s (CBK) Monetary Policy Committee (MPC) is widely expected to retain the Central Bank Rate (CBR) at 9.75 per cent during its upcoming meeting on August 12, 2025, as the policymakers opt to wait for the full impact of earlier rate cuts to filter through the economy. 

The apex bank has slashed rates by a cumulative 325 basis points since August 2024, when the CBR stood at 13 per cent.  

Analysts say the committee is now likely to pause further cuts in a bid to strike a delicate balance between anchoring macroeconomic stability and allowing recent interventions to stimulate the real economy. 

“We project that the MPC will maintain the Central Bank Rate at 9.75 per cent, mainly supported by the need to allow more time for the effects of previous monetary policy measures to take hold,” Cytonn Investments said in its pre-MPC brief. 

Lending activity 

The slowdown in private sector credit growth remains a concern. Growth stood at just 2 per cent in May 2025, down from 4.5 per cent a year earlier.  

This indicates that the recent easing cycle has yet to significantly boost lending activity. 

“Maintaining the current rate will provide an opportunity to assess the full impact of these measures before taking further action,” Cytonn noted, warning that further cuts at this point could amount to premature easing, particularly with inflation risks still lurking and the global interest rate cycle at a pause. 

Kenya’s stance also mirrors decisions by major central banks. The European Central Bank on July 24 opted to hold its key rate at 2 per cent, while the US Federal Reserve maintained its benchmark rate in the 4.25–4.50 per cent range during its July 30 meeting, extending a steady-hold stance that began in January. These global signals support the case for caution. 

“Given the actions of global central banks, the MPC may choose to take a more cautious approach, ensuring domestic factors are fully aligned before implementing further cuts,” Cytonn stated. 

This approach helps mitigate against potential capital outflows that could arise from a wider interest rate differential between Kenya and developed markets. 

Another pillar of support for holding the rate steady is the relative stability of the Kenyan Shilling, which has shrugged off June’s rate cut with minimal volatility.  

The local currency has depreciated by just 0.2 basis points against the US dollar since June 10, remaining around Ksh129.2, a level seen as stable given current conditions. 

Kenya’s foreign exchange reserves, currently at 4.7 months of import cover, provide an additional buffer.  

This is well above the statutory requirement of four months, affording the CBK some breathing space in its rate deliberations. 

“The continued stability of the Shilling against major currencies… provides the MPC with the flexibility to maintain the current rate without risking currency volatility or capital outflows,” Cytonn stated.