- The Central Bank of Kenya’s Monetary Policy Committee cut the Central Bank Rate (CBR) by 0.25% on Tuesday, December 9
- After the Central Bank of Kenya cut the base lending rate, Equity Bank revised interest rates on new local-currency variable-rate loans
- The Kenya Commercial Bank (KCB) also said its customers who took loans from December 11 will also benefit from a lower rate
TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting, offering insights into Kenyan and global economic trends.
Two Kenyan banks, Equity and Kenya Commercial Bank (KCB), have revised interest rates on new local-currency variable-rate loans after the Central Bank of Kenya cut the base lending rate.
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The variable-rate loan is tied to the CBK benchmark index and a fixed margin set by lenders.
Which loan notice was issued by Equity Bank?
In a notice on Thursday, December 11, 2025, published in the Daily Nation, the financial institution said new borrowers will benefit from the lower base rate.
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The change will benefit customers who took out loans effective from Monday, December 1, 2025.
“All new local currency variable-rate loans, effective from Wednesday, December 10, 2025, will be priced under the revised CBR of 9%, plus the applicable customer premium (K). This change will also affect facilities issued after Monday, December 1, 2025, where such facilities pricing will accordingly be adjusted by the reduction in CBR from 9.25% to 9% effective immediately,” Equity Bank stated.
However, Equity noted that existing local currency variable-rate loans that are still priced using the Equity Bank Reference Rate (EBRR) will switch to the Central Bank Rate (CBR) by February 28, 2026.
The bank said a 30-day notice and, if necessary, variation letters would be sent to customers whose facilities are scheduled for transition, informing them of the switch from the Equity Bank Reference Rate to the CBR, along with the relevant customer premium.
What did KCB tell customers?
At the same time, KCB also reduced the local currency-denominated variable-rate loans by 0.25%.
“New local currency-denominated variable-rate loans taken from Wednesday, December 11, 2025, will be priced on a base rate of 9.0%. The final lending rate is based on a customer-specific margin, adjusted to the base rate, in line with the pricing model,” KCB stated in a notice.
Source: Getty Images
The lender clarified that after the 30-day notice period, as mandated by CBK, all facilities applied for starting on December 1, 2025, will be changed appropriately.
On the other hand, it noted that all current local currency variable-rate loans taken before Monday, December 1, 2025, will remain under the current terms until the end of the CBK-mandated transition period (February 28, 2026).
Why did the CBK cut the base lending rate?
On Tuesday, December 9, the CBK governor Kamau Thugge explained the bank’s move to lower the benchmark rate.
According to Thugge, the move aims to improve access to affordable credit to boost economic activity.
He said the Monetary Policy Committee (MPC) determined that a 25-basis-point reduction in the CBR would allow for a further softening of the monetary policy stance.
Proofreading by Jackson Otukho, copy editor at TUKO.co.ke.
Source: TUKO.co.ke
