CBR unlikely to be revised upwards as the stimulus is expected to be in place til June 2010. It doesn't need to go done either as banks are liquid. So no changes to CBR or CRR. Inflation is expected to drop next month.

Private sector credit is better thanks to manipulation of govt stats. Govt borrowing to continue unchecked to mop up unwanted liquidity and they'll borrow at lower rates to reduce debt payments.

Incidentally this is all good for the stock market as lower rates and low inflation will make valuations rise. This coupled with economic projections may prompt more "buy" recommendations.

They have implemented some pretty strong regulations on weekly reporting.

http://234next.com/csp/c...s/5508142-147/story.csp

What did the Nigerians do at their MPC meeting.

Read more:

http://www.cenbank.org/O...anuary_4_and_5_2010.pdf

The banking sector had a growth rate of 56.1% in aggregate domestic credit (net) (boy that's pretty high). And despite various policy measures reserve money is still below indicative benchmarks; in Kenya it's at par, so liquidity seems fine.

as vvs says...the cbr is a baseless rate...cbk need to make it more relevant...

With all the borrowing going on we ask ourselves...what are they using all this money on? The govt made a confession that of the 24.2b of stimulus funds only 3.25b had been spent...apparently issues with project contractors, but they're still hopeful. So why are they still borrowing more?

Read more:

http://www.businessdaily...2/-/6bbojf/-/index.html

A good thing about Treasury borrowing is that it’s getting it cheap and this is important for repayments. In Kenya we pay interest+principal to our external debts, but pay interest only on our domestic debts...& domestic interest alone comprise more 10% of KRA revenues per year.

A word on Kenyan inflation…look at the latest CBK weekly bulletin, there is a graph showing 12-month overall inflation dipping below 12-month underlying inflation. The rains have lowered food prices considerably, but do we have things backwards, everything else (alcohol, tobacco, fuel, power, transport, housing, clothes, etc…) is much much higher? What happens at the end of February 2010 when KNBS reduces the food inflation weighting to 40.0%, which statistic will be more relevant when core inflation continues to climb above headline inflation?

The last time underlying inflation was at par with overall inflation was in Oct-2005, which coincidentally is when the base index for the new CPI geometric mean...so was Oct-2005 chosen for this reason? Does it represent a time when food inflation was at its lowest?

A citibank analyst observed that food and energy accounted for much of the increase in Kenyan inflation. Food inflation (based on 1997 prices) in Oct-2005 was 2.3% vs 25.2% in Sep-09 while fuel&power inflation declined from 11.0% to -9.5%. But look at the rise in fuel index in geometric terms...I'm not surprised that core (underlying) inflation is up.

The CBK monthly economic review reveals that total govt revenue collected by KRA was up 13.7% to 269b over 2008 but below the target of 278b. Public debt climbed by 14.7% to 1,115b during the same period. So what does this mean when the rate of Kenya's debt grows faster than revenue collections? The CBK says the following "cumulative govt expenditure on interest and other charges on domestic debt increased from Ksh13.5 billion in the first half of fiscal year 2008/09, to Ksh31.2 billion in a similar period of the fiscal year 2009/10".

So interest and other charges on domestic debt rose 131% compared to 2008 so it's in the best interest for govt to maintain lower borrowing rates...sound familiar, becoz this is the scenario playing out in the US. So by the end of 2009, for every shilling KRA was collecting, 16.4 cents was being used to pay domestic interest and external debt service vs the 9.1 cents we were paying in 2008 (80% rise).

Finally the CBK balance sheet shows them holding 16.6 billion worth of govt securities on the asset side...what does this represent? This represents the money the CBK has printed/created to facilitate the growth of Kenya's public debt. On the liability side, at Dec-09 GOK was holding 70billion at CBK which is up 18billion from Nov-09...so this seems the preferred way Treasury wants to contain all that liquidity CBK has been creating, basically mopping up bank liquidity during govt bond auctions & not spending it...after all the govt admitted two weeks ago that they have only spent a fraction of stimulus borrowings.