Interest Rates On The Rise in Kenya

Just the other day, the Central Bank of Kenya raised its lending rates; now it`s the turn of the banks!

Following the inflation that hit Kenya and is still in progress, the CBK saw it better to intervene after a short-lived debate on the issue. But gaze what their intervention was, nothing new of-course apart from the usual monetary policies.

The CBK decided to apply the very famous monetary policies in its attempt to curb the rising inflation. Little did they know that there would be a turn out of events such as there is now.

The CBK resulted to raising the CBR (central bank rates) from  5.75%  in march to the current 6.25%. The bank also revised the commercial banks reserve requirements upwards all in the efforts of mopping out the excess money circulating in the economy.

In addition the bank also issued more government papers at very enticing rates as compared to the what commercial banks are offering for the savings deposited with them. This has resulted to many people slashing their savings to buy the government papers, the effect - less money available for commercial banks to lend.

 Things as they are unfolding now, commercial banks are starting to raise their lending rates too.


The Commercial Bank of Africa has set the pace by increasing its lending rates by 1.5%  to 14.5% from the previous rate of 13%. this figure has indeed surpassed the average lending rates as set by CBK at 13.92%.


With the continued inflation, and the weakening of the shilling, the rates are most probably going to rise even higher with the other banks following suit.

For my fellow dear Kenyans, its time to get ready for less credit availability compounded by high rates of interest whenever one is lucky to get any.

It is now that time when each person must plan their finances right or else, they may find themselves wallowing in the muddy waters of debts they can not service.



Biz Quote:
"An economist's guess is liable to be as good as anybody else's."
Will Rogers