Nairobi — The Central Bank of Kenya (CBK has increased the base lending rate to 10.5 percent to curb inflations, signaling costly loans for individuals and businesses.

CBK in its latest Monetary Policy Committee (MPC) increased the lending rate from 9.5 percent in May.

The decision comes amid high inflation that rose to 8 percent in May from 7.9 percent, according to the Kenya National Bureau of Statistics (KNBS).

High inflationary pressure was exerted by a rise in the cost of food and non-food alcoholic beverages at 10.2 percent as well as housing, water, electricity, gas, and other fuels at 9 percent.

"The Committee noted the sustained inflationary pressure, the increased risks to the inflation outlook, the elevated global risks, and their potential impact on the domestic economy," CBK Governor Kamau Thugge said in a statement.

"The MPC thus concluded that there was scope for further tightening of the monetary policy to anchor inflation expectations," Thugge added.

The exorbitant cost of getting loans is set to affect hundreds of businesses that rely on them for expansions, coming at a time when a good number of them are slowly recovering from the election period as well as the Coid-19 pandemic.

"The committee will closely monitor the impact of the policy measures, as well as developments in the global and domestic economy, and stands ready to take further action as necessary."