How? T-Bills & Bonds yields on the rise. Heck, why would a conservative bank even lend to customers at 16% with the risks rather than T-Bills?

*Of course, customers also bring in fee income but I see a contraction in lending for many banks*

Now what's left is thorough rain and we will be back in form

Ahem! Time to re-route more customer deposits into GoK paper. Can't knock the bank hustle. Super profits.

At times I worry about the economic sense of this good professor...This is clear knee jerk reaction to the sliding of the shilling.
Are we surprised that the shilling has fallen? No, this was a long time coming especially with high imports, low exports or entry of dollars. The research department at CBK should have noted this early especially with reduced pirate money and capital flight before elections. Or has money been printed??
We cannot use the European fundamentals of hiking interest rates to sort out our problems. While in most stable economies these would tempt higher saving or entry of forex, the Kenya shilling is so unstable that no forex would come in. The risk is too high. A large proportion of our 'development projects' are financed by debts. ( Loans. We are not a savings culture
The ripple effect will result in higher cost of borrowing from banks and T-bills, more expense shrinking of economy. In a country where 50% live on less than a dollar, this will result in higher inflation, job losses, higher cost of transport, food.
The higher base rate will lead to higher t-bill rates reminiscent of the 1990's.
The losers will be workers, traders, businessmen and wanainchi and next government . The winners will be wenyeinchi, banks and high net individuals and institutional investors.
Our public debt is increasing, our budget is unsustainable our output decreasing.
We are the next Greece in the making, only difference that we have already sold our Tana Delta, Oil exploration rights. Our children and grandchildren will pay this debts, what is annoying is that we will pay to wenyeinchi's children. We need to rethink our economic strategy!!
I am very angry so should anyone with a bank loan, mortgage or pays taxes.

The good Prof is finally smoking some good herbs...the economy was hearded for a hard lending...i think the situation which was coming was worse..look at all my articles...the key words..crisis.. recession and probably public unrest...once again i'm challenging someone to show me where/which country were interest rates hiked and then chopped down latter has resulted in Stagflation?

In my fine prints I cant see where its written that my Bank could increase or reduce the monthly loan repayment.
Am I reading right?

@The deal ,wont this make the cost of getting credit for businesses higher and kill the businesses then ?
How will businesses expands ? what of those that are highly geared? death? no?

Wait till you see/hear the annual results for Kenol-Kobil then we can see if you will be able to use Kenol vs Total analogy.
You can't compare a company like Apple with a company operating in Kenya(or other developing country).The working environment there is quite different. Not that we dont have entrepreneurs here but those in developed countries have a head start.(everything on a silver plate )3 month LIBOR rate for example is curently below 0.5%
compare this now with our 11% for CBR rate ?

Cost of capital is what drives an economy you make it high you stall the economic growth

American crisis has been caused by factors other than high interest rate Key among them capitalism and liberalization.

They have failed to protect key/strategic industries and let foreigners (China and India) milk them(do the jobs and take the dollars.Im afraid we(kenyans) are doing the same and it will just worsen the situation in not too longtime.I saw chinese selling toys and hawkers items at the Nairobi International trade fair.This should not be allowed .Instead the Chinese should only be showing us how to make the machines for making these toys(technology transfer).

Our cotton industry is dead yet I saw in the trade fair that we have the technology and labour to revive it , only the political will is lacking. Being labour intensive this could create many jobs .Only that our fat cats are importing second hand (mitumba ) clothes to enrich themselves .

http://economyincrisis.o...sed-our-economic-crisis


Were the interest rate higher , then the crisis will have been unbearable to the Americans .