Kenyans seeking loans from lending institutions will have to wait longer for affordable credit after the Central Bank of Kenya (CBK) yesterday increased its benchmark lending rate by 75 basis points to 8.25 percent.
During the campaigns, President Ruto gave a promise of cheap credit to low-income earners which includes jua kali artisans, boda boda operators, and mama mboga popularly known as the hustlers.
While explaining its decision to raise the country’s lending rates, The Monetary Policy Committee (MPC) – the highest decision-making organ of CBK – cited a persistent rise in prices of goods and services and the elevated global risks and their potential impact on the domestic economy, as some of the major reasons behind this move.
MPC said that while the economy shows strong resilience, shocks from food shortages, a weak shilling, and imported inflation in the form of surging food prices could lead to a spike in consumer goods prices if the liquidity is not tightened.
The overall inflation rate stood at 8.5 percent in August, the highest since June 2017 and beyond the CBK’s target of between 2.5 and 7.5 percent.
This is the highest Central Bank Rate (CBR) since January 2020.