The Kenya Bankers Association (KBA) has called on the Central Bank of Kenya (CBK) to retain the Central Bank Rate (CBR) at 8.75 per cent when the Monetary Policy Committee (MPC) meets next week.The KBA Centre for Research on Financial Markets and Policy said on Friday, October 2, that maintaining the current rate would support the recovery in private sector credit and sustain economic activity.The MPC is scheduled to meet on Wednesday, October 7, 2026, to review the prevailing monetary policy conditions and determine the direction of the CBR.In its latest Research Note, the KBA research centre said inflation remains within the CBK's target range, despite rising in recent months.Headline inflation increased from 4.3 per cent in February to 6.8 per cent in September, moving closer to the upper limit of the 2.5 to 7.5 per cent target range, according to the bankers.The increase was largely driven by food and transport costs, with food inflation reaching 9.5 per cent and transport inflation standing at 15.6 per cent in September.Despite the rise in prices, the KBA said demand pressures remained limited, while its forecast showed inflation could ease as food supply improves with the onset of harvests in major agricultural regions.“With inflation within the target range, and exchange rate stability sustained, sustaining the current stance of monetary policy, to anchor the recovery in private sector credit and economic activity is appropriate,” the research centre said.The banking lobby also pointed to economic growth as a reason for maintaining the current rate, noting that real GDP expanded by 5.3 per cent in the first quarter of 2026, compared to 4.9 per cent during the same period in 2025.However, the KBA warned of risks to the recovery, including higher fuel and food prices, rising production and transport costs, weaker global economic growth and the expected El Niño rains from October 2026 into the first quarter of 2027.The association said exchange-rate stability continues to cushion the economy against imported inflation, while the current monetary policy stance, favourable interest-rate differentials and declining Treasury bill yields are supporting growth in private sector credit.The recommendation comes after the MPC retained the CBR at 8.75 per cent during its August 11 meeting, saying the decision would help keep inflation expectations anchored while the economy faced global uncertainties and risks linked to higher oil prices.
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