@scubidu - Well... there is a disconnect between CBR & Overnight Rates... but that is not the issue here...

The issue is that you cannot tie long-term rates to CBR... They are very different species... They do not mate well...

OMO is used to regulate short-term rates. Sometime longer-term rates too. CBR & OMO often work hand in hand. Say Overnight is higher than CBR, then CBK 'buys' T-Bills to release cash into the market bringing down Overnight rates. Often done through Repos.

t bill/bonds rate are market driven...the cbk cannot use theyre rates for purposes of signalling per se...agreed a 5 year lending shud be benchmarked against the 5 year bond rate...

the lombard rate was a euphimism for the term lender of last resort rate...i think cbk must clearly distinguish between the lombard rates and cbr rate becoz each achieves its own independent function..as i said it seems like the OMO(repo rates) have earned enuff respect from the market as a signalling rate as they act as an oportunity cost of sorts...maybe cbr and repo rates shud be closer?? i dunno im no economist...

@vvs. good points. very knowledgable.

@kizee. I found an interesting doc online & I think it could help you come up with ideas as to how to modify the current windows (if its possible). The link is http://research.stlouisfed.org/aggreg/ and you shud download the doc called "Understanding Open Market Operations" by M.A. Akhtar. I read it briefly. Check out page 35 on the doc (page 39 on pdf). I think this is an excellent source of teaching especially for universities.

@VVS. Ya think it was a question of man-power, that they stopped M3? It takes a pretty long time for the CBK to publish its monthly reviews.

In some circles M1 is considered the most relevant; i.e., transaction accounts and money in circulation. At least within the Kenyan context M1 alone has registered considerable changes over time.

There are some folks that have suggested implementing a system that run over the internet, where all money is digital, a unique serial code (much like the serial numbers on paper notes). How safe would that be given our techonology and how practical (given internet penetration)...but it would be easier to track though.

Secondary lending by Mpesa is flexible but what if they remove the caps on transfer volumes...CBK would favour a system specifically designed to track everything and anything, right?