Equity Bank announced today it will increase its reference lending rate by 0.68 percentage points to 18.24%, effective February 20th. The move comes in response to the Central Bank of Kenya’s decision earlier this month to raise its benchmark interest rate by 0.5 percentage points to 13%.
In a notice to customers, Equity Bank said the adjustment is necessary “to stabilize prices” amid persistent high inflation. The bank cited the latest statistics showing overall inflation remained “sticky in the upper band of the target range” in January, with increases across fuel, food and other non-food items.
“Following the adjustment of the Central Bank Rate from 10.5% to 12.5% in December 2023 and from 12.5% to 13% in February 2024, Equity Bank shall adjust Equity Bank’s Reference Rate from 17.56% to 18.24%,” the notice stated.
With the rate hike, customers taking out new Kenya shilling-denominated loans from Equity will face higher borrowing costs. The final interest rate comprises the bank’s reference rate of 18.24% plus a margin currently capped at 8.5%.
