The Central Bank of Kenya has announced a reduction in the Central Bank Rate (CBR) by 25 basis points to 8.75 per cent from 9.00 per cent to stimulate lending in the private sector.

In a statement by the Central Bank of Kenya on X, CBK noted that the decision was made during the Monetary Policy Committee (MPC) meeting held on Tuesday, February 10, 2026.

The decision will be a major boost for Kenyans seeking cheaper loans and mortgages since commercial banks use the CBR as a benchmark for setting lending rates.

“Having considered these developments, the Committee therefore concluded that there was scope for a further easing of the monetary policy stance by reducing the CBR by 25 basis points,” CBK stated.

Worth noting, the relief will augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity, while ensuring inflationary expectations remain firmly anchored and the exchange rate remains stable.

Narrowing interests

The Monetary Policy Committee also noted that the revised banking sector Risk-Based Credit Pricing Model (RBCPM), which will be fully operational by March 2026, will improve the transmission of monetary policy decisions to commercial banks’ lending interest rates and enhance transparency in the pricing of loans by banks.

The Committee further noted the ongoing implementation of the FY2025/26 government budget and the planned fiscal consolidation strategy to reduce debt vulnerabilities over the medium term.

To further strengthen the effectiveness of the monetary policy implementation framework and enhance monetary policy transmission, the committee approved a narrowing of the interest rate corridor around the Central Bank Rate (CBR) from the current ±75 basis points to ±50 basis points.

The narrowing of the interest rate will further support the alignment of the Kenya Shilling Overnight Interbank Average (KESONIA) to the CBR.

Likewise, in line with the review, the Committee also approved the adjustment of the applicable interest rate on the Discount Window from the current 75 basis points above CBR to 50 basis points, which is the upper bound of the interest rate corridor.

The latest review comes as the country’s inflation slowed slightly to 4.4 per cent year-on-year in January 2026, down from 4.5 per cent in December 2025.