The recent hike of base lending rate by the Central Bank of Kenya through the Monetary Policy Committee (MPC) from 10.5 percent to 12.50 percent will have far-reaching implications, especially for everyday Kenyan citizens, small business owners, and micro, small, and medium enterprises (MSMEs) during this Christmas and New Year holiday season and beyond.
This increase in the MPC lending rate leads to higher interest rates for loans, affecting individuals and businesses dependent on borrowing for various purposes, such as home loans, business expansion, or daily operations. Inflation has paused at 6.8 percent, which is above the Central Bank of Kenya (CBK) preferred rate of 5.0 percent. This means households are not cutting back on the demand for goods and services despite high prices.
