A monetary report has indicated that for the first six months of the year banks increased their loans to clients by 20.9% in the month of May and 20.5% in June against the targets of 18.9 and 18.2%, respectively that had been set by the Central Bank of Kenya.
This lending grew at a brisk pace in the 2014/2015 fiscal year. Financial lenders remained within target or slightly below target from the regulator in February and March.
The credit growth had some impacts on the economy as it heavily contributed to demand pressures in the economy, and, therefore, led in the rise in non-food, non-fuel inflation which is often called the core inflation.
The effect of the credit moving beyond the target of the regulator is that it leads to inflation and there is need, therefore, for the Central Bank of Kenya to formulate policies to make sure that lenders operate within the target set.