A Tenth of a Point: Bank Loans Sit at 14.40 Per Cent After the Rate Hold

A bank is still charging 14.40 per cent after the Central Bank left its own rate alone, and the gap is the story.

The Monetary Policy Committee met on 7 October and kept the Central Bank Rate at 8.75 per cent. Governor Kamau Thugge chaired the sitting. The background pack dated 8 October, posted by the Bank on 9 October, records that hold and the numbers underneath it. The committee does not meet again until December.

An earlier piece already set out how the Bank supplies cash between meetings while that rate stands. This one is about what a borrower is actually charged.

The average commercial-bank lending rate was 14.40 per cent in September, against 14.30 per cent in August and 17.20 per cent in November 2024. The policy rate did not move. The shop rate moved the wrong way, by a tenth of a point. Credit to businesses and households still grew 10.60 per cent, up from 10.

30 per cent in August, and a long way from the 2.90 per cent fall in January 2025. Bad loans were 13.90 per cent of the book in September, down from 14.80 per cent in June and 17.60 per cent in August 2025. The Bank says cheaper loans, measured against late 2024, are why firms are borrowing. A household looking at 14. 40 per cent will not feel a tenth of a point.

Prices moved, the rate did not

Inflation was 6.80 per cent in September, up from 6.60 per cent in August. The target band is 5 per cent, give or take 2.50 points, so 6.80 is still inside it and closer to the ceiling than to the middle. Core inflation rose to 4 per cent from 3.40 per cent. The Bank said milk, wheat products and cooking oil did that.

Non-core inflation, vegetables and energy, fell to 14 per cent from 14.70 per cent. Subsidies and a temporary cut in value-added tax on fuel are what the Bank credits for keeping the energy line from doing more damage.

The current-account gap widened to an estimated 3.10 per cent of the economy in the year to August, from 2.10 per cent a year earlier. Imports rose 15.80 per cent. Exports rose 11.80 per cent. Remittances fell 1.30 per cent. Reserves were $14.70 billion, about KSh 1.90 trillion at KSh 129 to the dollar, or 5.

90 months of imports. Growth for 2026 was revised to 5 per cent, from 4.90 per cent, after 4.60 per cent in 2025. The interest bill already budgeted on local debt does not change because the policy rate was held. A personal loan priced at 14.40 per cent does not change either, until a bank decides to pass the older cuts through.