CBK lowers policy rate as Ksh holds steady
By Faith Lagat, October 11, 2025The Central Bank of Kenya (CBK) has lowered the Central Bank Rate (CBR) by 25 basis points to 9.25%, down from 9.50%, following a meeting of the Monetary Policy Committee (MPC) held on October 7, 2025.
The move, announced in CBK’s Weekly Bulletin dated October 9, is aimed at stimulating economic growth by supporting increased lending to the private sector, which has shown gradual improvement.
The decision comes against the backdrop of stable inflation expectations, with CBK projecting the rate to remain within the target band of 5±2.5% in the near term.
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This easing contrasts with the more cautious approach adopted by several major global central banks amid mixed global growth and inflation trends.
“The Monetary Policy Committee (MPC) meeting held on October 7, 2025, decided to lower the Central Bank Rate (CBR) by 25 basis points to 9.25 per cent from 9.50 per cent,” read the CBK report in part.
“The Committee noted that overall inflation was expected to remain below the midpoint of the 5±2.5 per cent target range in the near term, and growth in commercial banks’ lending to the private sector continued to improve in line with declining lending rates, albeit at a slower pace than desirable.”
Shilling stability
The Kenyan shilling remained stable during the week ending October 9, 2025, exchanging at Ksh 129.24 to the US dollar, unchanged from the previous week.
“The Kenya shilling remained stable against major international and regional currencies during the week ending October 9, 2025. It exchanged at Ksh 129.24 per U.S. dollar on October 9, unchanged from Ksh 129.24 on October 2,” it said.
This stability is supported by robust foreign exchange reserves, which rose to Ksh 1.45 trillion as of October 8, equivalent to 4.9 months of import cover, well above the statutory minimum of four months.
The solid reserve position comes at a time of heightened global uncertainty, including the ongoing US government shutdown, which has entered its second week and strengthened the US Dollar Index by 1%.
Liquidity in the domestic money market remained adequate, with commercial banks holding excess reserves of Ksh 13.8 billion above the 3.25% cash reserve requirement. The Kenya Shilling Overnight Interbank Average (KESONIA) eased to 9.29% from 9.51%, indicating lower interbank borrowing costs.