Higher Loan Costs Loom for Kenyans as CBK Raises Base Lending Rate to 12.5%”

Borrowers in the country faced a significant setback as the Central Bank of Kenya (CBK) raised the benchmark lending rate to 12.5%, marking a 2-percentage-point increase from the previous rate of 10.5%. The decision, attributed to exchange rate depreciation and mounting external debt service in the public sector, is seen as a response to upward pressure on domestic prices. This upward revision poses a challenge to efforts aimed at providing more accessible and affordable credit, especially as households grapple with the ongoing high cost of living.

The move by the CBK underscores the broader economic impact of currency fluctuations and external debt dynamics, creating a complex landscape for borrowers and signalling potential challenges for the affordability of credit in the near term.