Credit squeeze likely to hurt Kenya’s private sector, bankers warn

The shilling has been weakening steadily in recent months. [PHOTO:FILE/STANDARD

NAIROBI: Although tightening of credit could ease pressure on the shilling and rein in inflation, bankers warn downside risks arising from the latest measure by Central Bank of Kenya (CBK) to raise both its policy and base rates could stifle credit uptake and business growth.

In its policy meeting on Tuesday, the banking sector regulator raised the Central Bank Rate (CBR) to 11.5 per cent from 10 per cent while also revising upwards the Kenya Bankers Reference Rate (KBRR) to 9.87 per cent from 8.54 per cent.