Sharp Daily
No Result
View All Result
Wednesday, May 14, 2025
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
Sharp Daily
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team
No Result
View All Result
Sharp Daily
No Result
View All Result
Home News

Tougher Times Ahead, With the Central Bank Rate Raised to 10.5%

Vincent Wangu by Vincent Wangu
June 27, 2023
in News
Reading Time: 2 mins read
CBK reinstates transaction charges

Central Bank of Kenya (CBK) headquarters. [Photo/ Courtesy]

On June 26, 2023, the Monetary Policy Committee voted to raise the Central Bank rate (CBR) by 100 basis points to 10.5% from 9.5%. The decision to raise the rate was ascribed to the economy’s ongoing inflationary pressures, with May inflation remaining elevated at 8.0%, slightly higher than the 7.9% recorded in April. Since June 2022, the inflation rate has remained above the Central Bank of Kenya’s target range of 2.5%-7.5%.

Read more: MPC Hikes Interest Rates to 9.5% from 8.75%

The meeting was unexpected given that in their previous MPC meeting, held on May 29, 2023, the committee was to meet again in July 2023. This marked the first MPC meeting held under the new leadership of Central Bank of Kenya Governor Kamau Thugge, who appears to be taking a more unpredictable approach to taming elevated inflation than his predecessor, former Governor Patrick Njoroge, since the tightening series began mid-last year.

Read more: The Double Edge Sword of Adjusting the CBR Rate

RELATEDPOSTS

Central Bank Rate hike affects performance of NSE

February 14, 2024

Kenyan banks suffer rare profit drop as loan defaults soar to KES 621billion

February 12, 2024

The decision to raise the CBR rate by 100 basis points appears to be a more proactive strategy, focusing on the long-term outlook rather than the short-term economic situation. President Ruto adopted the new Finance Bill 2023, which includes a number of tax adjustments as the government works to broaden its revenue base in order to minimize the budget imbalance, which, if not addressed proactively, might lead to a dramatic spike in the inflation rate.

The new finance bill 2023, which takes effect on July 1, 2023, will increase the VAT on petroleum products from the 8.0% that was introduced in 2018 to 16.0%, as well as introduce a 1.5% salary deduction from employees for the National Housing Development Fund (NHDF), a 5% withholding tax on payments related to the monetization of digital content, and an excise duty of Kshs 5.0 per kg on imported sugar.

Read more: Kenyan Government Plans to Borrow More Domestically

As a result of the additional taxes being enacted, it is expected that the cost of goods and services will increase as firms pass on the high cost of production to customers. The increase in the CBR rate appears to be a more proactive response to the potential danger of increased inflation brought on by the new proposal in the Finance Bill 2023.

Banks are anticipated to increase their lending interest rates in response to the CBR rate increase, which will decrease demand for loan financing. Furthermore, when loan financing costs rise, businesses would cut back on their expansion plans, which might have a negative knock-on effect on GDP growth.

Email your news TIPS to editor@thesharpdaily.com

Previous Post

President Ruto Ascends the Finance Bill 2023

Next Post

Absa Bank Kenya Partners with Visa in Redefining Digital Payment

Vincent Wangu

Vincent Wangu

Related Posts

Agriculture And Economy
News

Lets get Kenya out of FATF list

May 9, 2025
News

The downside of Impact Investing

May 2, 2025
News

Leadership challenges at the University of Nairobi

April 24, 2025
News

Easter eggs and earnings: Growing your nest egg with CMMF

April 16, 2025
News

Geoffrey Ruku declares KES 377M net worth during CS vetting

April 15, 2025
News

Butere girls teacher accused of altering play script with political content

April 14, 2025

LATEST STORIES

Structuring private equity deals in Kenya

May 13, 2025

Money market funds: Smart saving and investing in Kenya

May 13, 2025

Kenya in May: Safari, coastline & deals you shouldn’t miss

May 13, 2025

Public Health Spending expected to grow in line with ethical development goals

May 13, 2025

NBA: Knicks, Pacers, Timberwolves near conference finals

May 13, 2025

Lets build roads not rails

May 13, 2025

A KES 6.4 million real estate heartbreak in Syokimau

May 12, 2025

Kenya’s moral commitment amid the rising refugee population

May 12, 2025
  • About Us
  • Meet The Team
  • Careers
  • Privacy Policy
  • Terms and Conditions
Email us: editor@thesharpdaily.com

Sharp Daily © 2024

No Result
View All Result
  • Home
  • News
    • Politics
  • Business
    • Banking
  • Investments
  • Technology
  • Startups
  • Real Estate
  • Features
  • Appointments
  • About Us
    • Meet The Team

Sharp Daily © 2024