Nairobi — More banks are increasing their lending rates to match a similar hike by the Central Bank of Kenya (CBK).

The lenders include Co-operative Bank, Equity Bank, and NCBA Bank, among others.

Co-op Bank is the latest financial institution to increase its interest rate to 13 percent.

The cost of getting loans is going up after the CBK's Monetary Policy Committee (MPC) recommended an increase in its base lending rate to 10.5 percent from 9.5 percent in the previous month.

The committee increased the rate to curb inflation, which had risen to eight percent in June from 7.9 percent in May, according to the Kenya National Bureau of Statistics (KNBS).

"Following the recent adjustment of The Central Bank Rate (CBR), we wish to advise you that our new Base Lending Rate for Kenya shilling credit facilities will now be 13% p.a. with effect from 7th August 2023," Co-op Bank informed its customers.

Equity was the first lender to hike the rate in response to the changes to 13 percent.

It was followed by the NCBA Bank, which also increased its rate from 10.5 percent to 13 percent.

Exorbitant interest rates are set to discourage borrowing as it becomes more expensive to service loans.

This will impact small and large businesses as well as individuals who rely on credit to fund their businesses.