Central Bank of Kenya (CBK) announced an increase in the Central Bank Rate (CBR) from 10.50 percent to 12.50 percent following the Monetary Policy Committee (MPC) meeting on December 5, 2023.
Kenyans set to pay more for their loans after CBK Monetary Policy Committee raises the base lending rate by 2pc to 12.5pc from 10.5pc.
The last time the Central Bank Rate was at above 12% was in September 2012 (13%)
This move carries far-reaching implications for the Kenyan economy and its citizens.
In this comprehensive explainer, we delve into what this decision entails and how it may impact the lives of ordinary Kenyans.
Before dissecting the implications of the rate hike, let's briefly revisit the role of the benchmark rate.
The benchmark rate, or Central Bank Rate (CBR), is a crucial tool used by the CBK to influence economic activity by adjusting the cost of borrowing.
Borrowers in the country have been dealt a major blow after the Central Bank of Kenya (CBK) hiked the benchmark lending rate to 12.5%.
The increase represents a change of 2 percentage points from 10.5%.
CBK blames exchange rate depreciation which it said was exerting upward pressure on domestic prices and the rising of public sector external debt service.
The upward revision now complicates efforts to have cheaper and affordable credit as households continue to struggle with the high cost of living.
Kenyans set to pay more for their loans after CBK Monetary Policy Committee raises the base lending rate by 2pc to 12.5pc from 10.5pc.
The last time the Central Bank Rate was at above 12% was in September 2012 (13%)
This move carries far-reaching implications for the Kenyan economy and its citizens.
In this comprehensive explainer, we delve into what this decision entails and how it may impact the lives of ordinary Kenyans.
Before dissecting the implications of the rate hike, let's briefly revisit the role of the benchmark rate.
The benchmark rate, or Central Bank Rate (CBR), is a crucial tool used by the CBK to influence economic activity by adjusting the cost of borrowing.
Borrowers in the country have been dealt a major blow after the Central Bank of Kenya (CBK) hiked the benchmark lending rate to 12.5%.
The increase represents a change of 2 percentage points from 10.5%.
CBK blames exchange rate depreciation which it said was exerting upward pressure on domestic prices and the rising of public sector external debt service.
The upward revision now complicates efforts to have cheaper and affordable credit as households continue to struggle with the high cost of living.
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