The Central Bank of Kenya (CBK) has maintained the Central Bank Rate (CBR) at 8.75 percent, citing rising global risks, including disruptions to supply chains and higher energy prices linked to the ongoing conflict in the Middle East.
The decision was reached during the Monetary Policy Committee (MPC) meeting held on June 9, 2026, where the committee noted that Kenya’s inflation increased to 6.7 percent in May 2026 from 5.6 percent in April, driven largely by external pressures.
Despite the rise, the MPC said inflation is expected to remain within the target range in the near term and that the current monetary policy stance remains appropriate to anchor inflation expectations, support exchange rate stability, and sustain economic activity.
“The Committee concluded that the current monetary policy stance, with the Central Bank Rate unchanged at 8.75 percent, remains appropriate to ensure that inflation expectations remain anchored within the target range, and the exchange rate remains stable,” CBK said in its weekly bulletin.
The regulator noted that average lending rates in the domestic market have continued to decline, while private sector credit growth has shown improvement, signalling increased access to financing for businesses and households.
The Kenyan shilling remained relatively stable against major international and regional currencies during the week ending June 11, 2026.
The local currency traded at KSh129.48 against the US dollar on June 11, compared with KSh129.37 recorded on June 4.
CBK’s foreign exchange reserves remained strong at USD13.24 billion, equivalent to 5.6 months of import cover. The reserves remain above the statutory requirement of at least four months of import cover.
The domestic money market remained liquid during the week, supported by active open market operations by CBK.
Commercial banks held excess reserves averaging KSh17.9 billion above the 3.25 percent Cash Reserve Ratio requirement.
The Kenya Shilling Overnight Interbank Average Rate (KESONIA) remained unchanged at 8.75 percent on June 11, while interbank activity increased, with the average number of transactions rising to 25 from 17 in the previous week.
The average value traded also edged higher to KSh11 billion from KSh10.7 billion.
Treasury Market Sees Strong Demand
The Treasury bills auction held on June 11 attracted bids worth KSh39.3 billion against an advertised amount of KSh24 billion, representing a performance rate of 163.9 percent.
Interest rates for the 91-day, 182-day and 364-day Treasury bills increased marginally during the auction.
However, a Treasury bond tap sale conducted on June 8 recorded weaker demand, with reopened 15-year and 25-year bonds receiving bids worth KSh8.7 billion against a target of KSh15 billion, translating to a performance rate of 58.4 percent.
Activity at the Nairobi Securities Exchange (NSE) weakened during the week ending June 12, 2026.
The Nairobi All Share Index (NASI), NSE 25 Share Index and NSE 20 Share Index declined by 0.17 percent, 0.41 percent and 0.06 percent respectively.
Market capitalisation fell by 0.17 percent, while total shares traded and equity turnover dropped by 23.38 percent and 26.71 percent respectively.
Meanwhile, activity in the domestic secondary bond market improved, with bond turnover rising by 90.53 percent during the week.
Global Markets React to Inflation and Energy Concerns
Globally, inflation concerns remained elevated, with US inflation rising to 4.2 percent in May from 3.8 percent in April, marking the highest level since April 2023.
The US labour market remained resilient, with unemployment standing at 4.3 percent, although initial jobless claims increased slightly to 229,000, indicating gradual easing in labour market pressures.
In the Euro Area, the European Central Bank raised its policy rate to 2.25 percent and revised its 2026 growth forecast to about 0.8 percent, citing weaker demand and the impact of higher energy costs.
The US Dollar Index weakened by 0.2 percent during the week as demand for safe-haven assets eased following signs of progress in US-Iran negotiations.
Oil and Gold Prices Decline
Commodity prices declined during the week as geopolitical tensions eased.
Murban crude oil prices fell to USD84.60 per barrel from USD87.38 per barrel a week earlier, while spot gold prices declined to USD4,213.84 per ounce from USD4,473.89 per ounce due to reduced demand for safe-haven investments.
CBK said it will continue monitoring global developments and their impact on inflation, financial markets and Kenya’s economic outlook.
