Kenya raises policy rate to 13pc, the highest in 12 years

The Central Bank of Kenya (CBK) has raised borrowing costs to highs last seen nearly 12 years ago, as it moved to contain stubborn inflation and pull a handbrake on the free fall of the Kenya shilling.

The banking sector regulator on Tuesday increased its base lending rate by 50 basis points from 12.5 percent to 13 percent, a level last witnessed in the sunset years of President Mwai Kibaki’s administration.

The decision has effectively given commercial banks the signal to increase their lending rates, setting up borrowers for a new era of expensive loans.

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