Blow to Borrowers as CBK Revises Lending Rate to 13%

The Central Bank of Kenya (CBK) has raised its benchmark lending rate for the second consecutive monetary policy meeting, saying the move would help lower inflation and address pressure on the local shilling currency.

The bank raised the rate to 13.0% on from 12.5%,its monetary policy committee (MPC) said in a statement, after a larger 2-percentage-point hike at the December MPC meeting.

“The proposed action will ensure that inflationary expectations remain anchored, while setting inflation on a firm downward path towards the 5.0% mid-point of the target range, as well as addressing residual pressures on the exchange rate,” the bank said.

Read: Kenya’s Inflation Drops Slightly to 6.6% Year on Year in December

Inflation picked up to 6.9% year-on-year in January, towards the upper end of authorities’ preferred medium-term range of 2.5% and 7.5%.

Kenya has been on the radar of foreign investors because of its strained public finances and a steep fall in the shilling in the leadup to the maturity of a $2 billion Eurobond in June.

President William Ruto has dismissed any risk the country will default on the bond, saying that Kenya was looking to buy back at least some of the bond in February or March.

By Reuters