Kenya's central bank holds at 8.75% as inflation edges up

According to the Central Bank of Kenya's 7 October statement, the policy rate stayed at 8.75% and the discount window rate at 9.25%. Ecofin reported on 8 October that annual inflation rose from 6.6% in August to 6.8% in September, and core inflation from 3.4% to 4%. The bank attributed the rise in core to some processed food prices. Inflation remains inside the 2.5–7.5% target band, but only 0.7 points below the ceiling.

The committee raised its 2026 growth forecast from 4.9% to 5% and left 2027 at 5.3%. According to Ecofin, the current account deficit is estimated at 3.1% of GDP in the 12 months to August; FX reserves of 14.7 billion dollars cover about 5.9 months of imports. The bank's indicative exchange rate published on 8 October was 129.94 shillings to the dollar.

In a four-point list of risks cited by Ecofin, the committee named rising energy prices, tension in the Middle East, global trade uncertainty and a possible El Niño. A 0.6 point rise in core inflation in a single month suggests the second-round effects of the oil shock have begun, with fuel price increases spreading into processed food and services. The October decision says easing is paused at 8.75% until that pass-through becomes clearer; the average lending rate stood at 14.34% in the bank's August data.