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Central Bank holds rate at 8.75% as milk, wheat and oil prices rise
The Central Bank kept its lending rate unchanged on 7 October. Core prices rose on milk, wheat products and cooking oil, and bank lending to business is growing again.
Money8.75%
Central Bank Rate, kept unchanged on 7 October
The Central Bank of Kenya’s Monetary Policy Committee kept the Central Bank Rate at 8.75% at its meeting on 7 October. Inflation, at 6.8% in September, is within the Bank’s target range, and the committee expects it to stay there.
What is pushing prices up
Core inflation, which leaves out the most volatile prices, rose to 4.0% in September from 3.4% in August. The committee puts that down mainly to processed foods: milk, wheat products and cooking oil.
It expects some upward pressure from fuel, with oil prices higher because of the conflict in the Middle East, but also expects food prices to ease with the above-average rains forecast for October to December.
Credit is growing again
Bank lending to private businesses grew 10.6% in the year to September, up from 10.3% in August, with lending to trade, building and construction, and agriculture strong. The average bank lending rate was 14.4%, against 14.3% in August.
The committee raised its forecast for the economy’s growth this year to 5.0% from 4.9%, on stronger industry and services. Its foreign exchange reserves stand at USD 14.7 billion, enough for 5.9 months of imports. It meets again in December.
Why it matters
- For food processors, the prices behind core inflation - milk, wheat and cooking oil - are raw materials.
- With the Central Bank’s rate unchanged, what a business pays for a loan depends more on its bank than on the Central Bank this time.
- The next rate decision is in December.
Sources
- Central Bank of Kenya - Monetary Policy Committee press release · 7 October 2026
- Central Bank of Kenya - MPC retains the CBR at 8.75 percent · 7 October 2026
