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CBK's CBR shocker @ 16.5% - Playing Serious Hard Ball?!
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kizee1
#61 Posted : Wednesday, November 02, 2011 11:17:15 AM
Rank: Member

Joined: 9/29/2010
Posts: 679
Location: nairobi
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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Renegade
#62 Posted : Wednesday, November 02, 2011 11:22:30 AM
Rank: Member

Joined: 4/18/2009
Posts: 118
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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the deal
#63 Posted : Wednesday, November 02, 2011 11:22:32 AM
Rank: Elder

Joined: 9/25/2009
Posts: 4,534
Location: Windhoek/Nairobbery
@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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accelriskconsult
#64 Posted : Wednesday, November 02, 2011 11:24:54 AM
Rank: Member

Joined: 4/2/2011
Posts: 629
Location: Nai
The situation is even worse in UG http://www.monitor.co.ug.../-/bheo5xz/-/index.html
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Renegade
#65 Posted : Wednesday, November 02, 2011 11:29:28 AM
Rank: Member

Joined: 4/18/2009
Posts: 118
the deal wrote:
@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!



Laughing out loudly Laughing out loudly Laughing out loudly Laughing out loudly Applause Applause Applause Applause
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Mainat
#66 Posted : Wednesday, November 02, 2011 11:31:34 AM
Rank: Veteran

Joined: 11/21/2006
Posts: 1,590
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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FUNKY
#67 Posted : Wednesday, November 02, 2011 11:35:20 AM
Rank: Veteran

Joined: 4/30/2010
Posts: 1,635
Despite the recent hikes demand for credit in Kenya and Uganda is growing.

http://www.monitor.co.ug...2/-/cyyje0/-/index.html

http://www.businessdaily...6/-/ymrxcyz/-/index.html
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kizee1
#68 Posted : Wednesday, November 02, 2011 11:38:06 AM
Rank: Member

Joined: 9/29/2010
Posts: 679
Location: nairobi
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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accelriskconsult
#69 Posted : Wednesday, November 02, 2011 11:39:28 AM
Rank: Member

Joined: 4/2/2011
Posts: 629
Location: Nai
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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Iborian
#70 Posted : Wednesday, November 02, 2011 11:44:39 AM
Rank: Member

Joined: 4/17/2009
Posts: 194
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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