The Kenya Bankers Association (KBA) has urged the Central Bank of Kenya (CBK) to retain the base lending rate at 8.75 per cent during its August 11 Monetary Policy Committee (MPC) meeting.

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The KBA's Centre for Research on Financial Markets on Friday, August 7, said maintaining the current interest rate would support business lending, stabilise the shilling and keep inflation low.

"With inflation anchored, as well as exchange rate stability, we view that maintaining the current stance of monetary policy in keeping the CBR unchanged at 8.75 per cent would be appropriate," KBA stated.

The bankers said inflation has remained under control despite global uncertainties, rising only slightly from 6.4 per cent in June to 6.5 per cent in July 2026, while staying within the CBK's target range.

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KBA argued that the increase has mainly been driven by supply-side factors, including higher food and transport costs, rather than excessive domestic demand.

"Overall inflation remains within the target range, with minimal threat of demand-driven inflationary pressures that continue to outweigh elevated supply-side pressures," the report noted.

The Association also said Kenya's economy remained strong despite global tensions, growing by 5.3 per cent in the first quarter of 2026, up from 4.9 per cent a year earlier.

It attributed the stronger performance to growth in the industrial and services sectors, supported by increased manufacturing output, construction activity and a rebound in tourism and hospitality.

However, KBA warned that Kenya's economy still faces major risks, including slower global economic growth caused by geopolitical tensions and the ongoing conflict in the Middle East.

Despite these challenges, the KBA said previous cuts to the lending rate have helped lower borrowing costs, noting that lower lending rates have encouraged more borrowing by businesses and individuals.

📰 Source: Kenyans.co.ke