The Central Bank of Kenya (CBK) has reduced the Central Bank Rate (CBR) from 9% to 8.75%, effective February 10, 2026, in a move aimed at stimulating private sector lending and supporting the country’s economic growth.
Under the new directive, new loans will be priced at the updated CBR of 8.75%, plus a premium that reflects the borrower’s risk profile.
This means banks will assess each borrower individually to determine the additional interest charged above the base rate.
Existing loans will be gradually transitioned to the new risk-based pricing model by the end of February 2026. Borrowers should expect a phased adjustment rather than an immediate change to their current loan terms.
While the total interest payable over the life of a loan may be affected, monthly repayments might not change immediately. This gives borrowers time to adapt to the revised interest structure.
The CBK cited stable inflation and a positive economic outlook as reasons for the rate adjustment. Inflation stood at 4.4% in January 2026, while GDP growth is projected at 5.5% in 2026 and 5.6% in 2027.
The rate cut is expected to encourage lending across key sectors, including construction, trade, and consumer durables, as part of the central bank’s broader strategy to enhance credit availability and stimulate private sector activity.
