The Central Bank of Kenya (CBK) is likely to slash the country’s lending rates further, opening the door for cheaper loans and mortgages for Kenyans, economists have projected ahead of the next policy meeting.
Experts say easing inflation and a calmer global commodities environment have created room for the regulator to lower borrowing costs, continuing a trend that began last year. The move would translate into reduced interest rates for personal loans, business credit, and home financing.
According to market analysts tracking African economies, Kenya is among several countries expected to cut interest rates at the start of the year as price pressures continue to slow. Economies such as Egypt, Nigeria, and Zambia are also projected to lower borrowing costs, though central banks are expected to act cautiously as easing cycles near their end, according to Bloomberg.
Emerging markets strategist Gergely Urmossy has projected that Kenya could see a further 25-basis-point cut, noting that domestic inflation trends support monetary easing, even as global investor sentiment remains a key risk factor. Kenya’s benchmark rate currently stands at 9 per cent.
Economists further argue that a lower policy rate directly affects what Kenyans pay on loans because commercial banks rely on the Central Bank Rate (CBR) as a benchmark when pricing credit. Any reduction, therefore, feeds into cheaper repayments for borrowers, particularly those on variable-rate loans.
The expectations follow CBK’s decision in December last year to cut the Central Bank Rate by 25 basis points from 9.25 per cent to 9 per cent during a Monetary Policy Committee (MPC) meeting held on December 9, 2025. The cut marked the ninth consecutive rate reduction by the regulator.
“The Monetary Policy Committee decided to lower the Central Bank Rate to 9.00 per cent from 9.25 per cent,” CBK said at the time, signalling relief for households and businesses grappling with high borrowing costs.
At the time, CBK attributed the decision to easing inflationary pressures and a supportive global environment, noting that several major central banks had begun cautiously loosening monetary policy amid mixed growth and inflation outlooks.
The regulator also pointed to easing international oil prices, supported by increased production and weaker global demand, which has helped contain domestic inflation, although volatility remains due to global uncertainties.
Analysts say these factors strengthen the case for another rate cut when the MPC meets again in February, provided inflation remains within the target range and the shilling stays relatively stable.
However, CBK has warned that risks persist, including adverse weather conditions, trade policy uncertainty, and ongoing geopolitical tensions, which could disrupt inflation trends and limit the pace of further easing.
Even so, economists maintain that any additional cut, however small, would provide immediate relief to borrowers, reinforce consumer spending, and support economic growth.