NCBA raise rates to 10pc on CBK adjustments
By John Otini, October 12, 2022The NCBA bank is among the first banks to announce a rate hike after the Central Bank of Kenya (CBK) raised interest rates signalling the beginning of a tightening cycle.
NCBA says it will increase its base lending rate from 8.9 per cent to 10 per cent effective November 11, this year.
“Inline with the increase in the central bank of Kenya rate from 7 per cent to 8.5 per cent and an increase in the United States Federal Funds Rate from 0.25 per cent in January to the current 3.25 per cent, the NCBA base lending rate has been adjusted as follows,” the bank said in a statement to customers.
This could see borrowers pay higher monthly to service their loans especially mortgage holders.
NCBA Bank’s base lending rate for Kenya shillings denominated credit facilities will increase from 8.9 per cent. to 10 per cent whilst the base lending rate for USD denominated facilities will increase from 8 per cent to 9 per cent.
Need for tightening
As central banks battle to control inflation, CBK increased the main lending rate by 75 basis points to 8.25 per cent. The Monetary Policy Committee (MPC) raised the benchmark rate, arguing that tighter monetary policy is necessary given the growing inflation, global uncertainties, and their effects on the local economy.
The Kenya National Bureau of Statistics said this month that the inflation rate, which is a gauge of yearly fluctuations in the cost of living, increased to 8.5 per cent in August from 8.3 per cent.
“The Committee noted the sustained inflationary pressures, the elevated global risks and their potential impact on the domestic economy and concluded that there was scope for a tightening of the monetary policy in order to further anchor inflation expectations,” CBK said.