Every banker in his right mind knows that rising interest rates is the most counterproductive thing to do for curernt loan holders. This is because you assesed someone for a repayment of say 30K then where do you expect him to get 35K to repay you? He WILL default and as a bank you will have to increase your risk weighted assets. Then you can lend much less. You should hold it this way till the guy repays you consistently for six months for you to upgrade the loans and release your capital! So who is the fool here? the bank managers of course. They should increase interest rates for NEW borrowers as they will asses them for that repayment ability.

Anyway, all banks in Kenya lend on average up to 80% of their deposits which are held at below 8% interest. There is absolutly no reason to hike loans rates on the back of increased MPC hikes UNLESS you were arbitraging and for that you should be denied a banking licence and issued a gambling one.
my three cents.

With GOK so thirsty for cash and with the banksters in the know,they will just hike their ask for the return on goverment paper relative to the CBR rate.Tough times for guys at the Treasury.

True. bad times ahead

Kindly explain these two points. If there is more forex flowing into the country, chasing the same amount of kenya shillings, it follows that the exchange rate will STRENGTHEN, unless we print moolah.

It's a gamble which as Mainat has said may work or not work.

The problem is that foreign investors are seeing stars at home.That's why they have been exiting emerging markets.so there may not be much dollars to come in .
Even then why kill the domestic economy(industries) by increasing interest rates just to sell government bonds(more public debt).These will not add much value in the longrun as it will lead to the dreaded crowding out effect meaning No credit for private investors .