CBK Holds Rate at 8.75%: Borrowers Face 14.34% Average Loan Rates as Inflation Rises to 6.8%CBK Holds Rate at 8.75%: Borrowers Face 14.34% Average Loan Rates as Inflation Rises to 6.8%
Key Highlights
- The Monetary Policy Committee kept the Central Bank Rate at 8.75% on 7 October 2026, leaving the benchmark unchanged as annual inflation stood at 6.8% in September.
- Commercial banks charged an average lending rate of 14.34% in August against a deposit rate of 6.91% and a savings rate of 3.54%, a spread of 7.43 points.
- Short-term money market rates sit close to the benchmark, with the 91-day Treasury bill at 8.75% and the 364-day bill at 9.04%, so government paper competes with bank deposits.
The Central Bank of Kenya kept its benchmark rate at 8.75% on 7 October, which means borrowers should not expect cheaper loans soon.
The Central Bank of Kenya said its Monetary Policy Committee retained the Central Bank Rate, while annual inflation was 6.8% in September. With the benchmark only about 1.95 percentage points above inflation, the room to ease further is limited.
What borrowers pay
Banks charged an average lending rate of 14.34% in August, according to the central bank's key rates table. The average deposit rate was 6.91% and the savings rate 3.54%.
The gap between lending and deposit rates is 7.43 percentage points. On a loan of KSh 1M ($7,703), a borrower at the average rate would pay about KSh 143,400 ($1,105) a year in interest, before fees.
Where money market rates sit
The central bank's discount window rate stands at 9.25%, and the interbank rate, KESONIA, is 8.75%. Average rates on Treasury bills in the bank's 16 October bulletin were 8.75% for 91 days and 9.04% for 364 days.
Those yields are well above savings rates, so government paper remains a stronger option for savers than a bank savings account. Mwenendo earlier reported on how Kenya's inflation reached 6.8% as transport costs rose 15.6%, one reason the committee may prefer to wait.
Why a pause matters
A hold keeps the cost of new credit where it is, and it avoids adding pressure on a shilling that has been steady near KSh 130 to the dollar. As Mwenendo earlier reported, the shilling's cushion is thinning after Uganda's emergency hike.
The summary page does not set out the committee's reasoning or the date of its next meeting, so those points remain to be confirmed from the full press release.
In Summary
- What did the CBK decide?
- It retained the Central Bank Rate at 8.75%.
- Who decided?
- The Central Bank of Kenya's Monetary Policy Committee.
- When?
- At its meeting on 7 October 2026.
- Where do loan rates stand?
- Banks charged an average lending rate of 14.34% in August, against deposit rates of 6.91%.
- Why does it matter to borrowers?
- A hold keeps loan costs unchanged; KSh 1M ($7,703) at 14.34% costs about KSh 143,400 ($1,105) a year in interest.
- How do other rates compare?
- The 91-day Treasury bill is 8.75%, the 364-day bill 9.04% and the discount window 9.25%.