Banks Urge CBK to Maintain Interest Rates

Kenyan banks are urging the Central Bank of Kenya (CBK) to keep its main interest rate unchanged as the financial sector completes a major shift in how loans are priced. Through the Kenya Bankers Association (KBA), banks want the Central Bank Rate (CBR) to remain at 9 per cent ahead of the Monetary Policy Committee meeting, saying the focus should now be on allowing recent rate cuts to work through the system rather than making another adjustment.

The request comes as banks and borrowers prepare to finish moving Kenya shilling variable-rate loans to the new risk-based pricing model by the end of February 2026. Holding the rate steady, the banks argue, would reduce confusion and give lenders time to clearly adjust loan terms.

In December, the CBK cut the policy rate by 25 basis points to 9 per cent, following earlier reductions. The central bank pointed to lower inflation, a stable shilling and early signs of stronger private-sector lending.

Banks say a pause would make it easier to see whether these cuts are actually lowering borrowing costs for households and businesses. Instead of watching the headline rate, attention is shifting to how fast banks change loan prices, how clear the new terms are, and whether credit starts flowing to businesses and productive sectors.

If the CBK keeps the rate at 9 per cent, borrowers are expected to closely check their revised loan terms in February, when most repricing under the new system is set to take effect.