Kenya’s banking sector has presented a united front ahead of the Central Bank of Kenya’s Monetary Policy Committee (MPC) meeting on Wednesday, April 8, 2026. The Kenya Bankers Association (KBA) has urged the CBK to retain the benchmark policy rate at 8.75 percent, citing rising global risks that could pressure inflation and the shilling.
The call for a hold comes just weeks after the MPC’s last move. In its last review on February 10, 2026, the MPC lowered the Central Bank Rate by 25 basis points to 8.75 percent from 9.0 percent, a decision intended to stimulate private sector lending. However, the KBA now argues that conditions have shifted enough to warrant caution.
The KBA Centre for Research on Financial Markets and Policy said external shocks, including higher global oil prices and geopolitical tensions, pose upside risks despite inflation remaining within the target range. Headline inflation edged up to 4.4 percent in March, driven by increased food and transport costs, while core inflation remained relatively stable.
The transmission of previous rate cuts also remains incomplete. Private sector credit growth has improved but remains sluggish, with banks still cautious due to heightened lending risks and high levels of non-performing loans, which are leading to tighter credit conditions and constraining faster lending growth.
Foreign exchange stability is another concern flagged by the industry body. A widening current account deficit and potential disruptions to diaspora remittances, arising from protracted geopolitical conflicts, are seen as key risks to the shilling. Faster growth in imports relative to exports continues to drive demand for foreign currency, adding further pressure on the local unit.
Banks warn that moving rates in either direction could have unintended consequences. A rate cut could worsen inflation and currency pressures, while a rate hike could further slow credit growth and weaken economic activity.
The KBA recommended that the MPC maintain the policy rate at 8.75 percent to balance inflation control, economic recovery, and exchange rate stability, amid continued global uncertainty and geopolitical risks.
The CBK’s MPC will weigh these industry concerns alongside its own macroeconomic data before announcing its decision. Kenya’s economy grew by an estimated 5.0 percent in full year 2025, with growth projected to pick up to 5.5 percent in 2026, a trajectory the bankers’ lobby says could be protected best by holding steady for now.
