Kenya cuts lending rate for sixth consecutive time

Nairobi — Kenya’s central bank cut its benchmark lending rate for the sixth meeting in a row on Tuesday but by a smaller margin, saying it wanted to provide further support to the economy.

The central bank rate was lowered by 25 basis points to 9.75%, whereas its previous cut was by a larger 75 bps.

“There was scope for a further easing of the monetary policy stance to augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity,” the bank's Monetary Policy Committee said in a statement.

Economists polled by Reuters were divided on what the interest rate decision would be. Of seven forecasts, three were for a cut, three for no change and one for a hike.

The bank said it had revised down its 2025 economic growth forecast to 5.2% from a 5.4% forecast given at its last policy meeting in April “on account of higher tariffs on trade”.

It also forecast a current account deficit of 1.5% of GDP this year, narrower than the 2.8% of GDP deficit seen in April.

On the outlook for prices, it said inflation was expected to remain below the midpoint of its 2.5%-7.5% target range in the near term.

The East African country’s public finances have been under strain because of heavy debt repayments and revenue underperformance.

It has applied for a new lending programme from the IMF after abandoning the last review of a previous programme in March.

Reuters