The Central Bank of Kenya's Monetary Policy Committee has tainted the country's Central Bank Rate at 8.75% in its second meeting in 2026 on April 8.
- •The decision pauses a record 10-consecutive-cut easing streak for the first time since June 2024, as rising global energy prices and Middle East conflict risks clouded the domestic outlook.
- •The decision, announced by CBK Governor Kamau Thugge, ends the longest monetary easing cycle in the central bank's history, which cumulatively reduced the benchmark rate by 425 basis points from a cycle high of 13.0% in June 2024 to 8.75% in February 2026.
- •The committee said it needed to monitor potential second-round effects of higher energy prices on overall inflation before resuming any easing.
The MPC cited the escalating Middle East conflict as the primary factor behind the pause, noting that supply chain disruptions have driven international oil prices sharply higher, from USD 63 per barrel in December 2025 to nearly USD 98 by late March 2026.
Kenya's headline inflation edged up to 4.4% in March 2026 from 4.3% in February, remaining below the midpoint of the 5% target range. Core inflation held steady at 2.1%, though non-core inflation rose to 10.8% from 10.1%, driven by higher prices of tomatoes and Irish potatoes.
On the external front, the current account deficit widened to an estimated 2.4% of GDP in the 12 months to February 2026, from 1.3% of GDP in the same period in 2025. The MPC revised its 2026 current account deficit projection up to 3.0% of GDP from a prior estimate of 2.2%, reflecting higher oil import costs, slower diaspora remittance growth of 1.9%, lower services receipts, and reduced export projections. Forex reserves stood at USD 13,354 mn, equivalent to 5.68 months of import cover.
Despite the hold, domestic conditions remained supportive. Private sector credit growth accelerated to 8.1% in March 2026, the strongest reading in over two years, while average commercial bank lending rates fell to 14.7% from 17.2% in November 2024. GDP growth is estimated at 5.0% for 2025, though the 2026 projection was revised down to 5.3% from 5.5%, reflecting emerging risks from the conflict.
