Only informed depositors. Infact Member should mint the most with its vast retail base!

@bwenyenye. The prof seems to still believe it's supply driven. People seldom look at language used by the govenor but this time he said "these complimentary actions should effectively signal relief to the supply constraints that have been driving inflationary expectations..." Relief... sounds like a contradiction... or maybe he's trying not to loose face.

Fundamentally the liquidity in the market has been high ... rising since last year, which he believes was necessary for private investment. But it was bound to overheat (we have way too many imported cars here already). He expected the weak currency to rebalance import demand (lower it) but to what extend are we importing consumer goods. The demand seems inelastic. The decline in KES is due to the negative BOP. I believe raising the cbr will help that.

agreed with mainat...kes weaker than it was jana...lol! FAIL!

no sh** sherlock!

Bwenyewe: the CBR hike is lopsided on many fronts. Inflation-its current sources are domestic(less rain, money supply in form if M3 has steadily been increasing for many months) and external (oil prices, widening negative BoP gap have led to weaker siringi and therefore higher import cost for all sorts of goods and inputs). Only one of these variables can directly be impacted by the CBR. All the other things will take time to feed through. Weakening $/Ksh rate-this is being driven by widening -ve Balance of Payments gap as we are importing lots more and exporting not as much and hot money. Both can not be changed by CBR.
Our investment banks are only that in name only. Wengi wao wanatafuta kazi ya journalism.

Yesterdays auction on the 91 day treasury bills yielded 12.65bn. Last weeks yielded 7.85bn. Thats an increase of over 4.8bn. Rates went up to 14.86%.

Instead of keeping money in the bank, the logical thing for depositors is to put it into the bills.

This action is likely to mop up excess liquidity from the market. Cost of loans will go up and will eat into people's incomes. Spending reduces, people spend only on basics, and less on luxuries. Its a tough time to be in the business of luxuries. Inflation will be curbed, not so sure about the Fx rate.

Economy will grow at a less rate, due to high cost of capital.

For those attributing the depreciation of the shiling on the imbalance of imports vs exports, a qn for you. Kenya has always been a net importer. ALWAYS. That hasn't changed. Our Balance of Payments has always been tilted one way, so what has changed in this fundamental to warrant the the depreciation?

The following article appearing in the Daily Nation talks of everything that has gone wrong to get us to this point

http://www.nation.co.ke/Feature...12/-/bg08b4/-/index.html

fuel prices are high because of the fall in the shilling and rising crude globally..

food prices are high due to the prevailing drought...

power prices are high because of the prevailing drought..

housing prices are high due to inadequate supply to meet demand...

MY QUESTION IS: Which of these high prices can you curb by raising the bloody bank rate??

im starting to doubt the quality of Ndung'us Phd..

Policy failure. CBK is not in charge of the production and trade process. Ministries are

It's good to see everybody come out and say this and that...