Equity Bank has announced a reduction in loan interest rates for both new and existing borrowers following the Central Bank of Kenya’s (CBK) decision to lower the Central Bank Rate (CBR).

The move comes after the Monetary Policy Committee (MPC) revised the benchmark rate downward by 25 basis points to 9.00 percent from 9.25 percent during its meeting held on December 9, 2025.

In a notice addressed to customers, Equity Bank said the revision of the CBR will directly affect pricing for local currency variable-rate loans.

The lender stated that “all new local currency variable-rate loans, effective 10th December 2025, will be priced under the revised CBR of 9 percent, plus the applicable customer premium (K).”

The bank added that facilities issued after December 1, 2025 will also be adjusted to reflect the reduction in the benchmark rate.

The bank further noted that the change takes effect immediately, aligning its lending framework with the revised monetary policy stance by the CBK.

For existing borrowers, Equity Bank clarified that loans still priced under the Equity Bank Reference Rate (EBRR) will transition to the CBR framework by February 28, 2026.

According to the notice, “customers whose facilities are scheduled for transition will be issued with a 30-day notice and variation letters advising them on the change from the Equity Bank Reference Rate (EBRR) to the CBR, plus the applicable customer premium (K).”

Also Read: CBK Lowers Central Bank Rate by 25 Basis Points

CBK Policy Decision and Rationale

The rate cut by the MPC was aimed at stimulating lending to the private sector while maintaining macroeconomic stability.

CBK Governor and MPC Chairman Dr. Kamau Thugge said the Committee assessed several domestic and global developments before easing the policy stance.

“The Committee concluded that there was scope for a further easing of the monetary policy stance by reducing the CBR by 25 basis points,” Thugge said.

He added that the decision would “augment the previous policy actions aimed at stimulating lending by banks to the private sector and supporting economic activity, while ensuring inflationary expectations remain firmly anchored and the exchange rate remains stable.”

Inflation, Growth and Global Outlook

According to the CBK, Kenya’s overall inflation declined to 4.5 percent in November 2025 from 4.6 percent in October, remaining below the midpoint of the target range.

Core inflation also eased, reflecting lower prices of processed food items such as maize flour and sugar, even as non-core inflation rose due to higher vegetable prices.

On the global front, the MPC noted that growth has remained resilient, projected at 3.2 percent in 2025, but is expected to slow slightly to 3.1 percent in 2026 due to higher tariffs and geopolitical tensions.

Dr. Thugge observed that inflation in major economies has eased modestly, allowing central banks to cautiously begin easing monetary policy.

Also Read:CBK Explains How Securities Unlock Affordable Bank Loans

Banking Sector and Credit Growth

The MPC said Kenya’s banking sector remains stable and resilient, supported by strong liquidity and capital adequacy levels.

Non-performing loans declined marginally to 16.5 percent in November 2025, while credit growth to the private sector improved to 6.3 percent, reflecting better demand as lending rates fall.

Average commercial banks’ lending rates declined to 14.9 percent in November 2025 from 15.0 percent in October.

“This mainly reflects improved demand for credit in line with the declining lending interest rates,” Thugge said.

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The image shows the CBK headquarters in Nairobi Kenya