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and the inflation rate for june is....
Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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14.49 up from 12.95...thoughts? how much shud mpc hike cbr by given this developments?
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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kizee1 wrote:14.49 up from 12.95...thoughts? how much shud mpc hike cbr by given this developments? I was ecpecting 18/19%.. So this is a pleasant surprise Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 6/2/2008 Posts: 1,438
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@kizee1. These inflation figures are really getting out of hand, and there are enough analysts projection a figure of 20% before the year is out. CBR should be jacked up by 100 basis points to provide some shock therapy.
If the USD:Ksh rate can be restricted to the 90 shilling level and Brent Crude remains below USD 110 then perhaps we can avoid the rate going beyond 15% and then gradually subside to the 10% range towards the year-end. Am I being overly optimistic?
Treasury should also try and fund a large chunk of its deficit through overseas borrowing. This would restrict the rise in the rate of G.o.K paper while also bringing in some forex into the economy. I am no economist though, and with the Greek problems, I wonder whether international investors would go for it at rates that would not be usurious. What d'ya think?
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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mwanahisa wrote:@kizee1. These inflation figures are really getting out of hand, and there are enough analysts projection a figure of 20% before the year is out. CBR should be jacked up by 100 basis points to provide some shock therapy.
This current inflation is being driven by costs and not demand.. Jacking up the CBR in this environment will cause stagflation and worsen the situation Mark 12:29
Deuteronomy 4:16
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Rank: Elder Joined: 5/24/2007 Posts: 1,805
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guru267 wrote:mwanahisa wrote:@kizee1. These inflation figures are really getting out of hand, and there are enough analysts projection a figure of 20% before the year is out. CBR should be jacked up by 100 basis points to provide some shock therapy.
This current inflation is being driven by costs and not demand.. Jacking up the CBR in this environment will cause stagflation and worsen the situation That has been my take too. The current inflation is not demand oriented. It is supply oriented due to shortages of Oil, USD reserves in Kenya, Maize, housing, water, rainfall, you name it and therefore increasing borrowing costs is not solving anything. I am getting tired of the MPC now, they appear too intellectual and not pragmatic enough. I Think Therefore I Am
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Rank: Member Joined: 9/29/2010 Posts: 679 Location: nairobi
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mwanahisa wrote:@kizee1. These inflation figures are really getting out of hand, and there are enough analysts projection a figure of 20% before the year is out. CBR should be jacked up by 100 basis points to provide some shock therapy.
If the USD:Ksh rate can be restricted to the 90 shilling level and Brent Crude remains below USD 110 then perhaps we can avoid the rate going beyond 15% and then gradually subside to the 10% range towards the year-end. Am I being overly optimistic?
Treasury should also try and fund a large chunk of its deficit through overseas borrowing. This would restrict the rise in the rate of G.o.K paper while also bringing in some forex into the economy. I am no economist though, and with the Greek problems, I wonder whether international investors would go for it at rates that would not be usurious. What d'ya think? agree....this just in...theyve re-introduced wat is known as "window" borrowing" the cbr will no longer be the rate used to fund banks cbk clearing accts comittments!...a huge move!rate will be determined daily by 9pm and posted on cbks website the rate for todays purposes is 8%...A VERY BOLD AND SLY MOVE ON CBKS PART!
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Rank: Member Joined: 8/5/2010 Posts: 335 Location: Nairobi
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kizee1 wrote:mwanahisa wrote:@kizee1. These inflation figures are really getting out of hand, and there are enough analysts projection a figure of 20% before the year is out. CBR should be jacked up by 100 basis points to provide some shock therapy.
If the USD:Ksh rate can be restricted to the 90 shilling level and Brent Crude remains below USD 110 then perhaps we can avoid the rate going beyond 15% and then gradually subside to the 10% range towards the year-end. Am I being overly optimistic?
Treasury should also try and fund a large chunk of its deficit through overseas borrowing. This would restrict the rise in the rate of G.o.K paper while also bringing in some forex into the economy. I am no economist though, and with the Greek problems, I wonder whether international investors would go for it at rates that would not be usurious. What d'ya think? agree....this just in...theyve re-introduced wat is known as "window" borrowing" the cbr will no longer be the rate used to fund banks cbk clearing accts comittments!...a huge move!rate will be determined daily by 9pm and posted on cbks website the rate for todays purposes is 8%...A VERY BOLD AND SLY MOVE ON CBKS PART! Agreed, its about time. Any official communication / link? "I'd rather be lucky than clever... every time!" - ME
"The problem is not what we don't know... it's what we know for sure that just ain't!" - MARK TWAIN
"Space we can recover... time never!" - NAPOLEON BONAPARTE
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Rank: Member Joined: 12/2/2009 Posts: 286 Location: Nairobi
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What about the expected increase in power tariffs between 18-25%? If this is allowed by ERC, inflation will worsen further. I wish there was evidence on concerted, co-ordinated effort at addressing all these factors driving inflation. I see half hearted, half measured initiatives at best from government agencies. The laudable is more often than not rendered laughable by overclaim
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Rank: Member Joined: 12/2/2009 Posts: 286 Location: Nairobi
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What about the expected increase in power tariffs between 18-25%? If this is allowed by ERC, inflation will worsen further. I wish there was evidence on concerted, co-ordinated effort at addressing all these factors driving inflation. I see half hearted, half measured initiatives at best from government agencies. The laudable is more often than not rendered laughable by overclaim
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Rank: Chief Joined: 5/31/2011 Posts: 5,121
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guru267 wrote:kizee1 wrote:14.49 up from 12.95...thoughts? how much shud mpc hike cbr by given this developments? I was ecpecting 18/19%.. So this is a pleasant surprise I dont find it pleasant at all. The overall inflation figure of 14.49% can hide so many detailss. Check; 'Food & Non-Alcoholic Beverages' inflation is 22.52%. Transport inflation is 22.71%. 
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Rank: Member Joined: 3/10/2008 Posts: 301 Location: Abu Dhabi
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The window at a punitive rate is the way to go, sadly its coming after CBK has been used left right n centre for arbitrage profit (FX & MM).
Inflation costs are cost driven and may be temporary. The govt should just act to check on the food shortage, and maintain low taxes on oil till prices ease off. US is determined to see oil trading around the $80/bbl level, and another 10% or so may be in the offing from the current prices.
My 2cts
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Rank: Veteran Joined: 11/21/2006 Posts: 1,590
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The closing of the overnight window is a reaction to the fx issues of recent days. I think CBK has reaction is ott and this will actually lead to more banks trying their had at speculation. While tis good to get more Kenyan banks involved in providing fx, the reason the 4 banks were invited in the 1st place is because they are also leaders in the market reflecting the fact that clientele require fx. With all due respect to Equity, this is not an area it has comparative advantage in. The 2nd reason i think its an overreaction is that, speculation is not the only cause of the current Ksh weakness. Oil prices have been high, we’ve been importing maize. More broadly, we have a structural issue because we now importing even more than before i.e. BoP problem. Inflation is rising because of a lack of economic policy co-ordination. Thanks Uhuru Sehemu ndio nyumba
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Rank: Chief Joined: 8/4/2010 Posts: 8,977
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http://www.reuters.com/a...s-idUSLDE75S0QW20110629
And I hope CBK keeps up with the surprises to remind everyone who the boss is... @Kizee1 - this is what I wanted. Unconventional methods that squeezes out the short sellers. The element of surprise  @Mainat - It is a reaction, but at the moment this is the best choice. The only thing now is how to maintain the Ksh from sliding in a disorderly fashion with Treasury sleeping on their job... And this inflation bull has to be de-horned... At 20% even the gubberment won't be able to sleep... Food riots cannot be tear-gassed...?! $15/barrel oil... The commodities lehman moment arrives as well as Sovereign debt volcano!
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and the inflation rate for june is....
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