@guru - money supply... CBK needed a low rate so that they could have a reason to stimulate economy (print money)... With inflation rate fudged below their 5% threshold they had the green on flooding the banks with money...

@guru - KE is experiencing double whammy inflation (internal and external). UG also fudged their formula and they're getting it too. By fudging the inflation model, inflation got under reported as it worsened with the money supply flood devaluing the KES. Le Prof started devaluing KES even before bernanke went on a dollar printing spree. That was always going to come back and bite really hard...

Also once bernanke went on dollar printing rampage last year in Aug 2010, that imported dollar inflation was going to nail everyone as commodities (soft & hard) rallied to multi year highs till Q2 2011. With all that dollar flood, the G10 econs have nothing to show of it and that forbidden word 'recession' is back on the media scene... This will force G10 members to try and devalue their currencies vs the dollar to try and stimulate exports. The euro has a big weight on the dollar index and when it devalues (8% at the moment) all currencies feel the heat especially those of the emerging world.

[quote=guru267]@hisah what about when the crisis in Europe is finished ...[/quote

Guru, that's not gonna happen any year soon. Things are really thick on this side n the globalized nature of western economies has left leaders pretty powerless if not clueless. It's a grim drawn out outlook.