The Central Bank of Kenya (CBK) has once again revised its economic growth projections downward, citing sluggish private sector credit growth and external trade pressures.
In a double update this week, the CBK trimmed its 2026 GDP forecast to 5.4% from 5.6%, and the 2025 outlook to 5.2% from an earlier 5.4%.
The announcement comes alongside the bank’s decision to cut the Central Bank Rate (CBR) by 25 basis points to 9.75%, continuing a monetary easing cycle now in its sixth consecutive meeting.
CBK Governor Kamau Thugge said the latest rate cut is aimed at “supporting the recovery of private sector credit growth and bolstering overall economic activity.”
Thugge acknowledged that although sectors such as agriculture and services have shown resilience, weakening global trade conditions have forced the regulator to downgrade Kenya’s near-term growth prospects.
“We have seen a steady decline in private sector credit growth to 15.4% as of May,” Thugge said, adding that the CBK expects commercial banks to lower lending rates in response to the latest rate cut.
To hasten the transmission of monetary policy to borrowers, the CBK plans to release a revised risk-based pricing model next week.
The governor expressed frustration with commercial banks, accusing them of being quick to adjust rates upward but slow to reduce them when the benchmark falls.
This sluggish response, the bank argues, undermines the intended effect of its monetary easing policies, which aim to make credit more affordable and accessible, especially for businesses and households.
