Kenya Market Watch: Interest Rates and Treasury Yields – October 2025 Update

The Central Bank of Kenya (CBK) has released its latest data on key monetary indicators, giving investors and analysts insight into the current direction of Kenya’s financial markets.
The figures show a careful balancing act between maintaining price stability and supporting economic growth.

Key Financial Indicators (as of October 2025)

Treasury Bills & Bonds: What Investors Should Know

CBK continues to offer Treasury Bills (T-Bills) and Treasury Bonds (T-Bonds) through its DhowCSD platform, allowing both institutional and retail investors to participate directly in government securities.

 Auction Insights:

• The 91-day T-Bill yield has risen slightly to 7.924%, showing stronger demand for short-term government paper as investors hedge against uncertainty.

• Long-term T-Bond yields (through KESONIA) hover around 9.5%, maintaining attractiveness for investors seeking medium-term stability.

Monetary Policy Perspective

The Central Bank Rate (9.5%) suggests that CBK remains cautious about easing, even with inflation under control.
This stance helps:

• Keep the Kenyan shilling stable against foreign currencies,

• Manage inflation expectations, and

• Maintain investor confidence in government securities.

However, the relatively high lending rate (15.17%) continues to constrain private-sector credit growth — particularly for small and medium enterprises (SMEs).

Macroeconomic Snapshot

Kenya’s inflation rate of 4.58% (September 2025) sits comfortably within the target range, largely due to:

• Stable food prices,

• Moderated fuel costs, and

• A strengthening shilling following increased remittances and agricultural exports.

The combination of a moderate inflation rate and a steady CBR indicates that Kenya’s monetary policy is in a holding pattern, balancing growth support with fiscal discipline.

Analyst View (DatalytIQs Academy Insight)

For students and professionals studying Monetary Policy, Financial Markets, or Investments, these numbers provide a practical case study on how central banks:

• Influence market interest rates,

• Manage inflation expectations,

• And maintain liquidity through open market operations.

Investors can interpret the current landscape as favorable for fixed-income instruments like T-Bills and Bonds, but less supportive for private borrowing.

Investment Takeaway

• T-Bills (91-day, 182-day, 364-day): Ideal for risk-averse investors seeking predictable short-term returns.

• T-Bonds: Better for long-term investors looking to lock in higher yields around 9–10%.

• Equities and SMEs: May experience slower growth due to higher lending costs.

Educational Perspective

For learners at DatalytIQs Academy, this is an ideal moment to:

• Analyze the relationship between the Central Bank Rate and market interest rates.

• Practice yield curve interpretation using CBK’s Treasury data.

• Simulate investment decisions between short-term bills and long-term bonds based on expected inflation trends.

Conclusion

Kenya’s financial system remains resilient under a watchful CBK.
While interest rates stay elevated, inflation stability and consistent bond yields provide confidence for investors and policymakers alike.
The months ahead will likely see cautious optimism as the Central Bank weighs growth, inflation, and fiscal sustainability in its next policy meeting.