• The Central Bank reduces its policy rate to 9%, marking a ninth consecutive cut.

• Inflation remains contained at 4.5%, within the 2.5%–7.5% target range.

• Kenya and the IMF continue talks on a new financial arrangement amid disputes on debt classification.

The Central Bank of Kenya lowered its benchmark rate to 9% on December 9, trimming it by 25 basis points. The institution extended its easing cycle for the ninth consecutive time as it seeks to stimulate credit growth and support an economy exposed to rising climate risks.

The Bank said the reduction should “support economic activity” while preserving inflation and exchange-rate stability.

Kenya has posted annual growth of around 5% in recent years. National meteorological authorities recently warned that a potential drought could undermine agricultural output and weigh on overall performance.

Inflation stood at 4.5% in November, comfortably inside the target band of 2.5% to 7.5%. The Bank expects inflation to remain moderate in the coming months due to lower food prices and relatively stable energy costs. The Central Bank maintained its growth projections at 5.2% for 2025 and 5.5% for 2026. However, it raised its forecast for the current-account deficit to 2.3% of GDP for the next two years, up from previous estimates of 1.7% and 1.8%.

The decision comes as Nairobi continues negotiations with the International Monetary Fund for a new financial program after the previous arrangement expired in April 2025. Discussions focus largely on how to classify part of Kenya’s infrastructure-related debt, a contentious issue that has slowed progress toward a new deal.

M.F. Vahid Codjia