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CBK MPC Meet!!!
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GenghisCapitalLtd
#1 Posted : Thursday, December 01, 2011 9:10:47 AM

Rank: Bona-fide

Joined: 11/2/2011
Posts: 191
Location: Nairobi
Feels like I am in a thriller movie with the MPC meet later on today. Recent data from KNBS show inflation has increased to 19.72% so what will the MPC decide? Increase the CBR as the governor stated an increase in inflation will be counted by an increase in CBR? Will they hold it constant in that the CRR will kick in mid Dec or loosen it abit? I know the latter one has a remote chance of happening.
We think that there is a 55% chance of a further increase in CBR by at most 150bp as the CRR will kick in soon. 40% chance of it being held at 16.5%.
Going forward we do expect inflation to decelerate as what drove the increase was the food and energy...goodness I can go on about this forever but would prefer to know your thoughts Wazuans (wanted to post this jana but Wazua was down ama was it my internet connection)
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mkonomtupu
#2 Posted : Thursday, December 01, 2011 9:33:28 AM
Rank: Veteran

Joined: 2/10/2010
Posts: 1,001
Location: River Road
Let's hope they keep it constant or review it downwards these rates are killing viable firms. Most businesses are now focusing on paying loans instead being productive any further hikes will set us off on a downward spiral.
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Gordon Gekko
#3 Posted : Thursday, December 01, 2011 9:34:03 AM
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Joined: 5/27/2008
Posts: 3,760
300 bp, na hiyo si blood pressure.
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GenghisCapitalLtd
#4 Posted : Thursday, December 01, 2011 9:50:47 AM

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Joined: 11/2/2011
Posts: 191
Location: Nairobi
Gordon Gekko wrote:
300 bp, na hiyo si blood pressure.

@Gordon, 300bp will just kill any viable chance of economic growth cz even now the common man and firms are turning to cost reduction mechanisms to protect the bottom-line. A hike that big will result in massive defaults even an extension of the term period by 6 months will not help.
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GenghisCapitalLtd
#5 Posted : Thursday, December 01, 2011 9:52:43 AM

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Location: Nairobi
mkonomtupu wrote:
Let's hope they keep it constant or review it downwards these rates are killing viable firms. Most businesses are now focusing on paying loans instead being productive any further hikes will set us off on a downward spiral.

Totally agree and the market is reacting to that as well trading yesterday driven by foreign investors. Local investors are waiting Pray for the outcome of today's meet.
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2012
#6 Posted : Thursday, December 01, 2011 10:12:16 AM
Rank: Elder

Joined: 12/9/2009
Posts: 6,592
Location: Nairobi
This Governor should have been fired a long time ago! Raising the CBR is not a sustainable solution, it will kill businesses and it's put hard working Kenyans with unsecured loans on a leash. I even thought they would increase duty on non-essential goods. I wonder whether the bank would blame you of you defaulted or refused to increase your repayments to the new rate.

Is there a banker in the house? Please explain to me why people who took loans at 12-16% before the CBR was adjusted are being affected?

BBI will solve it :)
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GenghisCapitalLtd
#7 Posted : Thursday, December 01, 2011 10:22:20 AM

Rank: Bona-fide

Joined: 11/2/2011
Posts: 191
Location: Nairobi
2012 wrote:
This Governor should have been fired a long time ago! Raising the CBR is not a sustainable solution, it will kill businesses and it's put hard working Kenyans with unsecured loans on a leash. I even thought they would increase duty on non-essential goods. I wonder whether the bank would blame you of you defaulted or refused to increase your repayments to the new rate.

Is there a banker in the house? Please explain to me why people who took loans at 12-16% before the CBR was adjusted are being affected?

Great question but the small print in all loan contracts read like the bank has the right to adjust the rate accordingly without prior notice to the client, or something like that!
The bank's hands are tied in this case.
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Sufficiently Philanga....thropic
#8 Posted : Thursday, December 01, 2011 10:56:19 AM
Rank: Elder

Joined: 9/23/2010
Posts: 2,225
Location: Sundowner,Amboseli
Strictly speaking, the CBR should follow the inflation rate. So a 300 bps hike on paper sounds the like best rate hike regardless of what has caused the increase in inflation rate!
However, with inflation expected to cool in Q12012, this should be CBKs last rate hike (read pain to the public) and subsequent rates should come down!
I can do with 1 more rate hike for the sake of a better tomorrow, we all should!Of course the NSE will seriously bleed, and 2,700 we shall surely print!
BTW, @Kizee & Scubidu, where art thou!
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2012
#9 Posted : Thursday, December 01, 2011 11:08:12 AM
Rank: Elder

Joined: 12/9/2009
Posts: 6,592
Location: Nairobi
GenghisCapitalLtd wrote:
2012 wrote:
This Governor should have been fired a long time ago! Raising the CBR is not a sustainable solution, it will kill businesses and it's put hard working Kenyans with unsecured loans on a leash. I even thought they would increase duty on non-essential goods. I wonder whether the bank would blame you of you defaulted or refused to increase your repayments to the new rate.

Is there a banker in the house? Please explain to me why people who took loans at 12-16% before the CBR was adjusted are being affected?

Great question but the small print in all loan contracts read like the bank has the right to adjust the rate accordingly without prior notice to the client, or something like that!
The bank's hands are tied in this case.


Please explain. Assuming I took a loan at 12% in March, and my bank had borrowed from CBK, is bank repay the old loan at the new rate?

BBI will solve it :)
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KulaRaha
#10 Posted : Thursday, December 01, 2011 11:36:22 AM
Rank: Elder

Joined: 7/26/2007
Posts: 6,514
So now we expect good news in Q1 2012?

We were expecting good news in Q4 2011, nothing good coming out about inflation.

I suggest a rate hike, we are borrowing too much anyways, this economy needs to cool down and fast.

Then, if the supposed good news does come in, cutting rates is easy sana.

But I wouldnt hold my breath for respite....
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