NAIROBI, Kenya – Kenyan banks, including Co-operative Bank, Equity Bank, and NCBA Bank, are raising their lending rates in line with the recent interest rate hike by the Central Bank of Kenya (CBK). This adjustment has significant implications for borrowers, as loans become more expensive across the board.
The move comes after the CBK’s Monetary Policy Committee (MPC) recommended raising the base lending rate from 9.5 percent to 10.5 percent, citing the need to curb inflationary pressures. In June, inflation stood at eight percent, up from 7.9 percent in May, as reported by the Kenya National Bureau of Statistics (KNBS).
Co-operative Bank is the latest financial institution to implement the interest rate adjustment, increasing its rate to 13 percent. They informed customers that the new Base Lending Rate for Kenyan shilling credit facilities would take effect from August 7, 2023.
Equity Bank was the first to respond to the CBK’s decision, raising its rate to 13 percent. NCBA Bank followed suit, increasing its rate from 10.5 percent to 13 percent. As lending rates soar, borrowing becomes more costly, affecting both small and large businesses, as well as individuals relying on credit to fund their ventures.
The rise in lending rates poses challenges for borrowers and may discourage borrowing as servicing loans becomes increasingly burdensome. This development has widespread implications for businesses and individuals who heavily rely on credit to support their financial endeavors.
Kenyan borrowers should brace themselves for higher borrowing costs as financial institutions align their rates with the recent interest rate hike by the CBK. The impact of these increased lending rates will be felt across various sectors of the economy, calling for careful financial planning and strategic decision-making in the face of expensive loans.
By: Montel Kamau
Serrari Financial Analyst
12th July, 2023
photo source: Google
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