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CBK MPC Meet!!!
Rank: Bona-fide Joined: 11/2/2011 Posts: 191 Location: Nairobi
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Feels like I am in a thriller movie with the MPC meet later on today. Recent data from KNBS show inflation has increased to 19.72% so what will the MPC decide? Increase the CBR as the governor stated an increase in inflation will be counted by an increase in CBR? Will they hold it constant in that the CRR will kick in mid Dec or loosen it abit? I know the latter one has a remote chance of happening. We think that there is a 55% chance of a further increase in CBR by at most 150bp as the CRR will kick in soon. 40% chance of it being held at 16.5%. Going forward we do expect inflation to decelerate as what drove the increase was the food and energy...goodness I can go on about this forever but would prefer to know your thoughts Wazuans (wanted to post this jana but Wazua was down ama was it my internet connection) Follow us on Twitter @genghiscapital
“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.” Steve Jobs,iGenius
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Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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Let's hope they keep it constant or review it downwards these rates are killing viable firms. Most businesses are now focusing on paying loans instead being productive any further hikes will set us off on a downward spiral.
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Rank: Elder Joined: 5/27/2008 Posts: 3,760
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300 bp, na hiyo si blood pressure.
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Rank: Bona-fide Joined: 11/2/2011 Posts: 191 Location: Nairobi
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Gordon Gekko wrote:300 bp, na hiyo si blood pressure. @Gordon, 300bp will just kill any viable chance of economic growth cz even now the common man and firms are turning to cost reduction mechanisms to protect the bottom-line. A hike that big will result in massive defaults even an extension of the term period by 6 months will not help. Follow us on Twitter @genghiscapital
“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.” Steve Jobs,iGenius
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Rank: Bona-fide Joined: 11/2/2011 Posts: 191 Location: Nairobi
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mkonomtupu wrote:Let's hope they keep it constant or review it downwards these rates are killing viable firms. Most businesses are now focusing on paying loans instead being productive any further hikes will set us off on a downward spiral. Totally agree and the market is reacting to that as well trading yesterday driven by foreign investors. Local investors are waiting  for the outcome of today's meet. Follow us on Twitter @genghiscapital
“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.” Steve Jobs,iGenius
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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This Governor should have been fired a long time ago! Raising the CBR is not a sustainable solution, it will kill businesses and it's put hard working Kenyans with unsecured loans on a leash. I even thought they would increase duty on non-essential goods. I wonder whether the bank would blame you of you defaulted or refused to increase your repayments to the new rate. Is there a banker in the house? Please explain to me why people who took loans at 12-16% before the CBR was adjusted are being affected?
BBI will solve it :)
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Rank: Bona-fide Joined: 11/2/2011 Posts: 191 Location: Nairobi
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2012 wrote:This Governor should have been fired a long time ago! Raising the CBR is not a sustainable solution, it will kill businesses and it's put hard working Kenyans with unsecured loans on a leash. I even thought they would increase duty on non-essential goods. I wonder whether the bank would blame you of you defaulted or refused to increase your repayments to the new rate.
Is there a banker in the house? Please explain to me why people who took loans at 12-16% before the CBR was adjusted are being affected? Great question but the small print in all loan contracts read like the bank has the right to adjust the rate accordingly without prior notice to the client, or something like that! The bank's hands are tied in this case. Follow us on Twitter @genghiscapital
“Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected.” Steve Jobs,iGenius
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Rank: Elder Joined: 9/23/2010 Posts: 2,220 Location: Sundowner,Amboseli
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Strictly speaking, the CBR should follow the inflation rate. So a 300 bps hike on paper sounds the like best rate hike regardless of what has caused the increase in inflation rate! However, with inflation expected to cool in Q12012, this should be CBKs last rate hike (read pain to the public) and subsequent rates should come down! I can do with 1 more rate hike for the sake of a better tomorrow, we all should!Of course the NSE will seriously bleed, and 2,700 we shall surely print! BTW, @Kizee & Scubidu, where art thou! @SufficientlyP
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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GenghisCapitalLtd wrote:2012 wrote:This Governor should have been fired a long time ago! Raising the CBR is not a sustainable solution, it will kill businesses and it's put hard working Kenyans with unsecured loans on a leash. I even thought they would increase duty on non-essential goods. I wonder whether the bank would blame you of you defaulted or refused to increase your repayments to the new rate.
Is there a banker in the house? Please explain to me why people who took loans at 12-16% before the CBR was adjusted are being affected? Great question but the small print in all loan contracts read like the bank has the right to adjust the rate accordingly without prior notice to the client, or something like that! The bank's hands are tied in this case. Please explain. Assuming I took a loan at 12% in March, and my bank had borrowed from CBK, is bank repay the old loan at the new rate?
BBI will solve it :)
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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So now we expect good news in Q1 2012? We were expecting good news in Q4 2011, nothing good coming out about inflation. I suggest a rate hike, we are borrowing too much anyways, this economy needs to cool down and fast. Then, if the supposed good news does come in, cutting rates is easy sana. But I wouldnt hold my breath for respite.... Business opportunities are like buses,there's always another one coming
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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Sufficiently Philanga....thropic wrote:Strictly speaking, the CBR should follow the inflation rate. So a 300 bps hike on paper sounds the like best rate hike regardless of what has caused the increase in inflation rate!
However, with inflation expected to cool in Q12012, this should be CBKs last rate hike (read pain to the public) and subsequent rates should come down!
I can do with 1 more rate hike for the sake of a better tomorrow, we all should!Of course the NSE will seriously bleed, and 2,700 we shall surely print!
BTW, @Kizee & Scubidu, where art thou! i think the mpc shud be disbanded and cbks control over monetary policy shud be taken away, i beleive the market mechanism shud determine the optimal amount and price of money....sorry to divert from teh topic
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Rank: Member Joined: 2/8/2007 Posts: 808
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Some one appraise my economics 101. The economy was reeling from the effects of PEV and global slow down in 2008. It didn't help inflation was running out of control. CBK responded by reorganizing the inflation basket and recalibrating inflation. It further together with government responded by loosening monetary policy and an expansionist fiscal policy. These 2 were implemented in 2010.
In 2011, suddenly we discover inflation has gone up again and the currency has become rubbish and raise rates to ridiculous levels. The basics I know of economics are that when you implement a policy you wait for the induced cycle to run its course before attempting something different. Why are we doing flip flops with this economy year on year? I am willing to bet CBK is very clueless on this matter and are murking around.
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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Kausha wrote:Some one appraise my economics 101. The economy was reeling from the effects of PEV and global slow down in 2008. It didn't help inflation was running out of control. CBK responded by reorganizing the inflation basket and recalibrating inflation. It further together with government responded by loosening monetary policy and an expansionist fiscal policy. These 2 were implemented in 2010.
In 2011, suddenly we discover inflation has gone up again and the currency has become rubbish and raise rates to ridiculous levels. The basics I know of economics are that when you implement a policy you wait for the induced cycle to run its course before attempting something different. Why are we doing flip flops with this economy year on year? I am willing to bet CBK is very clueless on this matter and are murking around. in which case wouldnt we have faired better if we didnt have a CB?
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Rank: Veteran Joined: 12/3/2010 Posts: 1,141 Location: Londokwe
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ndungu reminds me of syokimau bulldozers. destruction.these interest rates will destroy many businesses 2012 is here.Kenya is Ours.Be Part of The Peace Keeping Mission To Protect Our Motherland.Say No To Violence and Tribal Hatred .If you can read this,wewe ni mtu amesoma, usifikirie kama mtu hajaenda shule .Ni Hayo Tu
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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Kausha wrote:Some one appraise my economics 101. The economy was reeling from the effects of PEV and global slow down in 2008. It didn't help inflation was running out of control. CBK responded by reorganizing the inflation basket and recalibrating inflation. It further together with government responded by loosening monetary policy and an expansionist fiscal policy. These 2 were implemented in 2010.
In 2011, suddenly we discover inflation has gone up again and the currency has become rubbish and raise rates to ridiculous levels. The basics I know of economics are that when you implement a policy you wait for the induced cycle to run its course before attempting something different. Why are we doing flip flops with this economy year on year? I am willing to bet CBK is very clueless on this matter and are murking around. The beeline...
2002 - econ contraction and elections -> 2003 - 2005 - econ reconstruction/money supply expansion -> 2007 -> Lotsa ponzi schemes & brokerage firm collapse -> 2008 -> PEV and GFC -> 2009 -> Post GFC stimulus and drought funds -> 2010 -> Inflation model manipulation and more stimulus -> 2011 -> inflation spikes, 1 trillion budget expansion, CBK rate hikes -> 2012 -> elections and econ contraction -> 2013 econ reconstruction.
By 2013 all will be well and already forgotten.
Wash, rinse and repeat... That's the econ cycle.$15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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Anymore hikes will be massively counter-productive and continue to show how out of touch with reality MPC is. Economically, we lost our when Mwiraria had to ngo Sehemu ndio nyumba
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Rank: User Joined: 8/6/2010 Posts: 594
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GenghisCapitalLtd wrote:Feels like I am in a thriller movie (wanted to post this jana but Wazua was down ama was it my internet connection) Now you are talking like Ruto. How long have you been in the NSE? If two years, kuwa mpole uone maneno. There are no movies in the stock market nor at the central bank. Hard reality is what Kenyans are facing daily because of following Western economic models which are only good for gay people.  "One man gives freely, yet gains even more; another withholds unduly, but comes to poverty. A generous man will prosper; he who refreshes others will himself be refreshed." Rev Canon Karanja.
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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Insurgent wrote:GenghisCapitalLtd wrote:Feels like I am in a thriller movie (wanted to post this jana but Wazua was down ama was it my internet connection) Now you are talking like Ruto. How long have you been in the NSE? If two years, kuwa mpole uone maneno. There are no movies in the stock market nor at the central bank. Hard reality is what Kenyans are facing daily because of following Western economic models which are only good for gay people. @insurgent there is no need to take things so seriously.. @genghis was only making a light joke.. Mark 12:29
Deuteronomy 4:16
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Rank: Veteran Joined: 9/4/2009 Posts: 700 Location: Nairobi
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kizee1 wrote:Sufficiently Philanga....thropic wrote:Strictly speaking, the CBR should follow the inflation rate. So a 300 bps hike on paper sounds the like best rate hike regardless of what has caused the increase in inflation rate!
However, with inflation expected to cool in Q12012, this should be CBKs last rate hike (read pain to the public) and subsequent rates should come down!
I can do with 1 more rate hike for the sake of a better tomorrow, we all should!Of course the NSE will seriously bleed, and 2,700 we shall surely print!
BTW, @Kizee & Scubidu, where art thou! i think the mpc shud be disbanded and cbks control over monetary policy shud be taken away, i beleive the market mechanism shud determine the optimal amount and price of money....sorry to divert from teh topic It's the fiscal and monetary policies that are out of balance. The governor is currently implementing knee jerk reactionary policies, but i don't believe that one person is to blame. I think the CBK/MPC need more independence from Treasury (as they have monopoly on monetary tools). They need to be able to steer Treasury in the right direction to avoid mismanagement and mixed signals. On person needs to be accountable and right now it's difficult to know exactly whose to blame. “We are the middle children of history man, no purpose or place. We have no great war, no great depression. Our great war is a spiritual war, our great depression is our lives!" – Tyler Durden
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Rank: Elder Joined: 7/26/2007 Posts: 6,514
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How can we blame Treasury when our MinFin is wanted for crimes against humanity? The fault is ours! Business opportunities are like buses,there's always another one coming
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