Kenya’s central bank has lowered its key interest rate for the fourth consecutive time to stimulate lending and economic growth.
On Wednesday, the Central Bank Rate was reduced by 50 basis points to 10.75%, matching the forecast of economists.
Additionally, the bank cut the Cash Reserve Ratio by 100 basis points to 3.25%. It also began inspecting banks to ensure they pass on the benefits of lower rates to customers.
The bank noted that economic growth slowed in 2024, which led to further easing of its monetary policy. It aims to support economic activity while maintaining exchange rate stability.
Inflation is expected to remain within the target range of 2.5%-7.5%.
The central bank projects the economy to grow by 5.4% in 2025, up from 4.6% in 2024 but slower than the 5.6% growth in 2023.
Growth will be driven by resilient key sectors like services, agriculture, credit recovery, and improved exports.
The bank forecasts a 3.8% current account deficit this year, slightly higher than 2024’s 3.7%.
Despite the deficit, capital inflows and IMF disbursements led to a balance of payments surplus of $1.466 billion in 2024. This surplus contributed to a $2.749 billion increase in reserves.Fourth consecutive rate cut by Kenya’s central bank
