The fault is the governor's 120% because he printed loads of Kshs last year and got clever by buying US $ from banks to inject liquidity in the market but resulted to playing with that liquidity in the repo market.

I believe he expected the liquidity would work miracles over night and spur growth of the economy. Unfortunately there are no economic policies supporting our lending model, people took the money and went to buy Plasma Tvs, cars, pay for MBAs and holidays.

Unfortunately Fuel went up and our wheat and maize stocks ran out. These require dollars to buy and suddenly the system was struggling for dollars since it sold them to CBK. The banking system started struggling for dollars. The economy hardly expands if the money lent is for consumption more so that which requires imports, therefore tax revenue hardly grew, CBK forgot to caution GK on its expenditure and off course we needed to import maize and wheat suddenly the extra USD CBK was stock piling was used up.

What I don't understand is if inflation is supply side driven, why raise rates, isn't it more punitive to do so because raising rates is meant to remove surplus liquidity from circulation and it assumes people have extra cash which will follow higher rates to the bank vaults. However with expensive food and energy, people hardly have money left after spending on the expensive food and energy. So which liquidity is Prof going after, the little the banks are about to lend or? Is he suggesting we save on eating, lighting our homes and walk to work so that we can bank the savings????

Either way they need to drop the rates to 9%. Already the Unions are pushing for extra wages while companies are not far commencing right sizings......

When you see banks are expanding they're loan books by 30-50% you should know that your economy is in trouble.

Bank stocks bulls, good luck! NSE below 3000 is a reality and not what if...