HomeBusinessCBK's increasing loan rates spell trouble.

    CBK’s increasing loan rates spell trouble.

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    As a result of inflation, the Central Bank of Kenya has raised the minimum lending rate imposed on loans by banks, tightening the economic noose that has been around Kenyans’ necks for some time.

    CBK governor Patrick Njoroge announced the minimum rate increase from 7.5 to 8.25% on Thursday, September 29.

    With the new maximum rate of 15.25 percent, banks in Kenya may charge borrowers an interest of anywhere between 8.25 percent to 15.25 percent.

    However, because of concerns about default rates from the ordinary mwananchi, banks will favor providing loans to the government and blue chip companies.

    The CBK raised rates to protect banks from the knock-on consequences of rising inflation both at home and abroad.

    As part of its inflation management strategy, the government emphasized that it must capitalize on the country’s recent economic progress to reduce price increases.

    To mitigate the impact of rising demand for imported items like petrol and palm oil on the value of the local currency, we will put our money where our mouths are and invest in domestic companies.

    CBK has reported a rise in loan repayments and recoveries as well as a decrease in non-performing loans in the nation, indicating that the banking industry is one of the sectors with a bright future.

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