Nairobi, April 7, 2026…The Kenya Bankers Association (KBA) Centre for Research on Financial Markets and Policy has urged the Central Bank of Kenya to maintain the benchmark policy rate at 8.75 per cent ahead of the Monetary Policy Committee meeting scheduled for tomorrow, citing rising global risks and increasing pressure on inflation and the exchange rate.
In its latest Research Note, the Centre says inflation remains within the official target range but faces external risks. Rising global oil prices and ongoing geopolitical conflicts are disrupting trade routes and supply chains, which could push prices higher. Headline inflation edged up to 4.4 per cent in March, mainly driven by higher food and transport costs, while core inflation remained subdued.
The Centre observes that Kenya’s economic recovery remains steady, but momentum is slowing as private sector activity slightly declines, while ongoing uncertainty related to conflicts in the Gulf and Ukraine continues to impact trade, investor confidence, and overall economic performance.
“Recent cuts in the Central Bank Rate have helped ease short-term interest rates and support lending. However, structural challenges in the financial system mean these benefits are taking time to fully reach businesses and households,” the Note states.
It notes that private-sector credit growth has improved but remains sluggish, with banks still cautious due to heightened lending risks and high levels of non-performing loans, which are leading to tighter credit conditions and constraining faster lending growth.
The Note also highlights pressure on the Kenyan shilling, caused by a widening trade deficit and possible disruptions to diaspora remittances, especially from the Middle East, as imports continue to grow faster than exports. This increases demand for foreign currency and puts additional pressure on the exchange rate.
Christine Onyango
Director, Communication and Public Affairs
Kenya Bankers Association
Email: conyango@kba.co.ke
About Kenya Bankers Association
The Kenya Bankers Association (KBA) is the umbrella body for all commercial banks in Kenya and is regulated by the Central Bank of Kenya (CBK). Established on 16th July 1962, KBA represents 46 member institutions with combined assets exceeding KES 7.7 trillion. Its core mandate is to promote a stable, competitive, and inclusive banking industry by influencing legislation, regulation, and policy to enhance access to affordable credit for individuals, households, and businesses. KBA also drives financial sector development through strategic initiatives, including the launch of Pesalink, the industry’s first peer-to-peer digital payments platform. In partnership with the CBK and other stakeholders, KBA has spearheaded projects such as the modernization of the National Payments System, implementation of the Real Time Gross Settlement System (RTGS), and the Kenya Credit Information Sharing Initiative. Guided by its brand statement, “One Industry. Transforming Kenya,” KBA continues to strengthen the banking sector, foster innovation, drive financial inclusion, and support national economic growth. Learn more: www.kba.co.ke
About the KBA Center for Research on Financial Markets and Policy®
The Center for Research on Financial Markets and Policy was established by the Kenya Bankers Association in 2012 to offer an array of research, commentary, and dialogue regarding critical policy matters that impact on financial markets in Kenya. The KBA Center for Research on Financial Markets and Policy sponsors original research, provides thoughtful commentary, and hosts dialogues and conferences involving scholars and practitioners on key financial market issues. Through these activities, the Center acts as a platform for intellectual engagement and dialogue between financial market experts, the banking sector and the policy makers in Kenya. It therefore contributes to an informed discussion that influences critical financial market debates and policies.
