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CBK's CBR shocker @ 16.5% - Playing Serious Hard Ball?!
Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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guru267 wrote:the deal wrote:
Nothing but garbage from Business Daily....ask @mainat he will tell you what type of inflation we have here...also try googling MV=PT...Stimulus/Quantitative easing...stagflation is different from an economic slow down/recession...Studying the U.S and Zimbabwe will also help.
@the deal you interest me.. You really think kenyas inflation is being mostly driven by quantitative easing.!? really?? and by the way noone has talked about a recession.. stagflation is a period of declining growth and rising inflation.. It will happen in kenya because the CBK has destroyed the investments horizon with interest rates hitting 25% soon and this will result into high unemployment as no one will hire and everyone will definitely be firing.. At the same time food & fuel prices will continue upwards because the drought wont stop causing inflation to be high.. high inflation + high unemployment = stagflation stagflation is said to be worse than inflation and defaltion.. i agree with deal, inflation IS caused by money supply exceding money demand(u can call it QE or whatever)lets see what happens now, money supply has reduced significantly, how will asset prices remain high? can u graph the relationship between purchasing power of money and the quantity of money?
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Rank: Member Joined: 4/18/2009 Posts: 118
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kizee1 wrote:i agree with deal, inflation IS caused by money supply exceding money supply(u can call it QE or whatever)lets see what happens now, money supply has reduced significantly, how will asset prices remain high? can u graph the relationship between purchasing power of money and the quantity of money? @kizze1, can you help me decipher the meaning of your statement above?
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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@guru inflation will come down...the Shilling is on a rally also the super CBR hike will curb capital demand..the repo's will take out excess money out of the system....i'm now expecting foreign inflows into GoK securities which will further strengthen the shilling...cos of the yield advantage over other markets...so throw away your stagflation theory...it wont happen!!! I used to talk of a recession when CBK was not hiking the repo rate...now we are on track...Contraction monetary policy!!! this is a case of cry now laugh later...the Kenyan economy will once again ROAAAAR in 2013! By then a referundum should be held to chase away the IMF!
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Rank: Member Joined: 4/2/2011 Posts: 629 Location: Nai
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Rank: Member Joined: 4/18/2009 Posts: 118
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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As policy making goes:This is the equivalent of a doctor prescribing amputation for a sore he should have treated a long time back. Ndungu has insisted most of this year that inflation was being driven by supply-side issues i.e. lack of rain. So has MPC jacked interests up by 900bps in the last two months? For that alone, he should get sacked. Imho, interest rates should have been increased not cut in March with gradual increase upto June. FinMin is a failure...On the fiscal side, Muigai has been totally asleep (comatose) even. We are now faced with a situation where GoK (read you and I) will be borrowing at almost 20% over the next 6-12 months. Impacts:Borrowers (lending to private sector increased by Ksh255bn yoy to June 2011-Ksh36bn was to real estate; Ksh32bn to private households and Ksh15bn for consumables) are now faced with increases in interest rates of around 6-10% compared to a few months back. So if you borrowed Ksh10m and you have Ksh5m outstanding, the interest payment is the same now. Ksh will strengthen (assuming Euro situation is resolved) Investing: If you are taxpayer, tafasali put your cash in t-bills. Your may as well lend to yourself at 15-20%. Sehemu ndio nyumba
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Rank: Veteran Joined: 4/30/2010 Posts: 1,635
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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Renegade wrote:kizee1 wrote:i agree with deal, inflation IS caused by money supply exceding money supply(u can call it QE or whatever)lets see what happens now, money supply has reduced significantly, how will asset prices remain high? can u graph the relationship between purchasing power of money and the quantity of money? @kizze1, can you help me decipher the meaning of your statement above? sorry typo..shud read money supply exceds demand..thanks for catchinh me out on that
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Rank: Member Joined: 4/2/2011 Posts: 629 Location: Nai
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I just received this interesting email,
The Kenyan Shilling has been observed by Reuters and other respectable publications as being the worst performing currency having depreciated by 25% in a span of about 6 months. This was an interesting session where in summary, IEA and other presenters observed the Kenyan Shilling had depreciated primarily due to a widening current and capital account deficit primarily caused by lack of co-ordination of fiscal and monetary policies. IEA and other facilitators observed that this was an opportunity for Kenya to be initiated (one observer said circumcised) into a new realm of refined policy making.
The email contains attachments from deliberations during the meeting. The attachments can be shared on request
T
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Rank: Member Joined: 4/17/2009 Posts: 194
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Mainat wrote:As policy making goes:
This is the equivalent of a doctor prescribing amputation for a sore he should have treated a long time back.
Ndungu has insisted most of this year that inflation was being driven by supply-side issues i.e. lack of rain. So has MPC jacked interests up by 900bps in the last two months? For that alone, he should get sacked.
Imho, interest rates should have been increased not cut in March with gradual increase upto June.
FinMin is a failure...
On the fiscal side, Muigai has been totally asleep (comatose) even. We are now faced with a situation where GoK (read you and I) will be borrowing at almost 20% over the next 6-12 months.
Impacts:
Borrowers (lending to private sector increased by Ksh255bn yoy to June 2011-Ksh36bn was to real estate; Ksh32bn to private households and Ksh15bn for consumables) are now faced with increases in interest rates of around 6-10% compared to a few months back. So if you borrowed Ksh10m and you have Ksh5m outstanding, the interest payment is the same now.
Ksh will strengthen (assuming Euro situation is resolved)
Investing:
If you are taxpayer, tafasali put your cash in t-bills. Your may as well lend to yourself at 15-20%. Mainat, I agree with your points above. All the same, this patient was staring death in the face. Better to amputate rather than let him die, ama?
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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If nothing else, the shilling is responding to the bitter medicine. http://af.reuters.com/ar...ws/idAFL5E7M205K20111102
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Rank: Elder Joined: 10/13/2009 Posts: 1,950 Location: in kenya
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accelriskconsult wrote:I just received this interesting email,
The Kenyan Shilling has been observed by Reuters and other respectable publications as being the worst performing currency having depreciated by 25% in a span of about 6 months. This was an interesting session where in summary, IEA and other presenters observed the Kenyan Shilling had depreciated primarily due to a widening current and capital account deficit primarily caused by lack of co-ordination of fiscal and monetary policies. IEA and other facilitators observed that this was an opportunity for Kenya to be initiated (one observer said circumcised) into a new realm of refined policy making.
The email contains attachments from deliberations during the meeting. The attachments can be shared on request
T send it to murksgabe@gmail.com'......to the acknowledgment of the mystery of God, and of the Father, and of Christ; 3 In whom are hid all the treasures of wisdom and knowledge.' Colossians 2:2-3
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Rank: Elder Joined: 9/23/2010 Posts: 2,220 Location: Sundowner,Amboseli
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hisah wrote:Sufficiently Philanga....thropic wrote:Funny, all bank stocks headed north today! Interesting, if you ask me! Yes, very interesting 
The sky is the limit only that it has an invisible glass ceiling. That crash into the ceiling is going to hurt... Smart money giving way to dumb money in bank stocks! @SufficientlyP
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Rank: Member Joined: 9/12/2006 Posts: 42
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accelriskconsult wrote:I just received this interesting email,
The Kenyan Shilling has been observed by Reuters and other respectable publications as being the worst performing currency having depreciated by 25% in a span of about 6 months. This was an interesting session where in summary, IEA and other presenters observed the Kenyan Shilling had depreciated primarily due to a widening current and capital account deficit primarily caused by lack of co-ordination of fiscal and monetary policies. IEA and other facilitators observed that this was an opportunity for Kenya to be initiated (one observer said circumcised) into a new realm of refined policy making.
The email contains attachments from deliberations during the meeting. The attachments can be shared on request
T send please alaneet8@gmail.com
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Bottom line this decision combined with the good rains & ongoing harvest is a win for main-street inflation wise. Personally, as an investor I am looking beyond FY2011 for meaningful gains. In the interim, I am pleased that basics are being addressed. Stock dips and cash to buy is also welcome  Merry Xmas.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Btw, IEA is yet another useless Kenyan economic commentator I have come across  Merry Xmas.
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Rank: Elder Joined: 9/25/2009 Posts: 4,534 Location: Windhoek/Nairobbery
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GO GO GO Kenya Shilling...the cure is working...CBK/IMF should hike again until we go back to 75 to the USD!!! Once inflation gets stuck at 4-5%...then we can talk of vision 2030!!!
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Rank: Member Joined: 4/19/2007 Posts: 68
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Hi,
The governor was very categorical about the reason for the increase in the CBR, we are using debt to finance consumption.
Get ready for a repeat of 1984 and 1992 when interest rates rose above 25%. The banks are making a blanket adjustment to all loans including mortgages.
This will result in a reduced standard of living for the middle class and an increase in defaults especially for those who have variable rate mortgages, roughly 80% of all mortgage owners.
Another group that is likely to suffer are those who have recently taken on large car loans.
The 2 groups have one major problem in that their incomes are fixed and even if they stand to get an increment in December it is unlikely to cover the increased repayments and the inflation rate.
All this are the dangers of having a president who is not seeking re-election and a parliament that is not expecting to return in the next term.
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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stocksguru wrote:Hi,
The governor was very categorical about the reason for the increase in the CBR, we are using debt to finance consumption.
Get ready for a repeat of 1984 and 1992 when interest rates rose above 25%. The banks are making a blanket adjustment to all loans including mortgages.
This will result in a reduced standard of living for the middle class and an increase in defaults especially for those who have variable rate mortgages, roughly 80% of all mortgage owners.
Another group that is likely to suffer are those who have recently taken on large car loans.
The 2 groups have one major problem in that their incomes are fixed and even if they stand to get an increment in December it is unlikely to cover the increased repayments and the inflation rate.
All this are the dangers of having a president who is not seeking re-election and a parliament that is not expecting to return in the next term. That is exactly the point! Mandatory lifestyle adjustment c/o the GoK. Priorities 1st, discretionaries last Merry Xmas.
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Rank: New-farer Joined: 10/13/2011 Posts: 67 Location: Kenya
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stocksguru wrote:Hi,
The governor was very categorical about the reason for the increase in the CBR, we are using debt to finance consumption.
Get ready for a repeat of 1984 and 1992 when interest rates rose above 25%. The banks are making a blanket adjustment to all loans including mortgages.
This will result in a reduced standard of living for the middle class and an increase in defaults especially for those who have variable rate mortgages, roughly 80% of all mortgage owners.
Another group that is likely to suffer are those who have recently taken on large car loans.
The 2 groups have one major problem in that their incomes are fixed and even if they stand to get an increment in December it is unlikely to cover the increased repayments and the inflation rate.
All this are the dangers of having a president who is not seeking re-election and a parliament that is not expecting to return in the next term. @stocksguru ---- And a Finance Minister who is fighting survival in the hague and busy campaining for Presidency in 2012.
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CBK's CBR shocker @ 16.5% - Playing Serious Hard Ball?!
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