Lending rates stuck at 14.4%: Mbadi urges banks to pass on 4-point CBR cut

Get breaking business news on WhatsApp

Average bank lending rates in Kenya were 14.4% in September 2026, even though the Central Bank Rate has fallen more than four percentage points since mid-2024. Treasury Cabinet Secretary John Mbadi used the NCBA Economic Forum in Nairobi on Tuesday, 3 November, to tell banks to close that gap.

“First, pass on the rate cuts. The Central Bank rate has come down by more than four percentage points since mid-2024. Yet the average lending rate is still at 14.4 per cent. Borrowers should feel more of that cut,” Mbadi said, according to People Daily.

Lending rates against CBK’s key rates

Source: Central Bank of Kenya key rates, read 7 November 2026. The gap between the average lending rate and the CBR is 5.65 points. The gap between lending and deposit rates is about 7.5 points.

What Mbadi asked banks to do

Mbadi said the government is borrowing less from banks, which frees room on their balance sheets. “We expect that room to go to the businesses in this room and to farmers, manufacturers and MSMEs,” he said. He also told the forum that banking sector assets rose 13.1% to KSh8.9 trillion in the year to June 2026, and profits rose 19.2% to KSh88.9 billion.

He pointed to the risk-based credit pricing model, meant to make loan prices follow the policy rate faster. He said every shilling the government commits to the Credit Guarantee Scheme has unlocked about KSh2.50 of bank credit, and that the scheme is being turned into a Kenya Credit Guarantee Company open to private capital. KBC carried the same 14.4% figure from his speech.

Why lending rates lag

Lending rates have come down, just slowly. Capital FM, reporting the October Monetary Policy Committee statement, noted that the average rate edged up to 14.4% in September from 14.3% in August, but was well below 17.2% in November 2024. Private sector credit growth rose to 10.6% in September, and gross non-performing loans fell to 13.9% of total loans.

Banks price loans on their own funding costs and on how risky they judge each borrower. Bad loans are still high by historical standards, which keeps risk premiums up. Inflation rising to 7.3% in October, which we covered in our October inflation report, also limits how fast the CBK can keep cutting.

What borrowers can do now

• Ask your bank for the annual percentage rate and the total cost of credit, not just the headline interest rate.
• If you have a variable-rate loan, ask how and when CBR changes reach your rate.
• Compare offers. Our Co-op Bank loans guide and bank-versus-bank comparisons list what each lender publishes.
• Savers should note the other side: average savings accounts paid 3.53%, below inflation. See fixed deposit rates at Kenyan banks.

The next MPC decision will show whether the CBK keeps easing. Banks’ response to Mbadi will show up in the CBK’s monthly lending rate data.