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Kenya's Njuguna Ndung'u Shows Australia How It's Done, Cuts Rate By 100 Bps Due To "Increase In Economic Confidence"

Tyler Durden's picture




 

Following on the widely telegraphed rate cut by the Australian central bank overnight to a record low 2.75%, here comes a truly surprise move out of the Kenya Central Bank, and its Governor Njuguna Ndung'u whose central bank just showed the world how it's really done:

  • KENYA CENTRAL BANK CUTS BENCHMARK RATE TO 8.50% FROM 9.50%
  • KENYA CENTRAL BANK SAYS CONFIDENCE IN ECONOMY HAS INCREASED

As long as the confidence is there... Incidentally, the expectations, by those who have nothing better to do than forecast what the Kenya central bank will do, was for a mere 25 bps cut. We expect the credit carry traders out of Niarobi to scramble for yield in places like Greece, now that their cost of funding has dropped by over 10%. The good news for those doing the inverse trade, and looking to trade Kenyan Eurodollar futures, or the "Kenyo-dollar" as the case may be, is that there still is a long way to go before all time lows rate lows are taken out.

In the global currency war, Kenya just may have far more ammo left than most developed world "ZIRP" banks.

Finally, for those wondering, the KCB governor has never worked at Goldman Sachs.

Prof. Njuguna Ndung'u

ndunguProf. Njuguna S. Ndung'u was reappointed to serve as the Governor of the Central Bank of Kenya for a further four year term with effect from March 4, 2011. Prof Ndung'u is an Associate Professor of Economics at the University of Nairobi and holds a PhD in economics from the University of Gothenburg, Sweden, and master's and bachelor's degrees in economics from the University of Nairobi.

Prior to his appointment as Governor of the Central Bank of Kenya, Prof. Ndung'u was the Director of Training at the African Economic Research Consortium. He has lectured in advanced economic theory and econometrics at the University of Nairobi, where he earned the title of Associate Professor of Economics. He also worked as the Regional Programme Specialist for the Eastern and Southern Africa Regional Office, Nairobi, of the International Development Research Centre (IDRC), Canada; and at the Kenya Institute of Public Policy Research and Analysis (KIPPRA) as a Principal Analyst/Researcher and Head of the Macroeconomic and Economic Modelling Division.

Prof. Ndung'u has had extensive research and teaching work in various fields of economics, including macroeconomics, microeconomics, econometrics and poverty reduction. A long-time researcher and trainer with the AERC and MEFMI network, he has published in international journals as well as chapters in various books on economic policy issues, inflation, interest rate and exchange rate issues, financial management, public sector growth, external debt, financial liberalization in Anglophone Africa, structural adjustment, as well as on employment and labour market issues.

 

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Tue, 05/07/2013 - 09:41 | 3537294 kito
kito's picture

of course kenyas economy has improved......TPTB are throwing wads of cash at africa right now...........its the last great place with oodles of debt potential.............poor africa......once they were physical slaves......now they will be debt slaves...............................

Tue, 05/07/2013 - 09:45 | 3537312 ParkAveFlasher
ParkAveFlasher's picture

I think mass dismemberment is the "fat tail" there.

Tue, 05/07/2013 - 09:47 | 3537319 flacon
flacon's picture

Keynesian Kenyan Kleptocrat.

Tue, 05/07/2013 - 10:00 | 3537367 mess nonster
mess nonster's picture

...in search of a white sale and a pair of scissors...

Tue, 05/07/2013 - 11:07 | 3537567 Scarlett
Scarlett's picture

that's where Mr. Hussein was born, isn't it?

Tue, 05/07/2013 - 09:50 | 3537332 BLOTTO
BLOTTO's picture

We are all slaves...its just who has more 'freedom' between the shackles/cuffs and the skin?

.

In Africa, they have a pride and something humble that we in the west have lost due to technology...In some ways, they probably make fun of us - and so they should.

 

Tue, 05/07/2013 - 09:54 | 3537344 whatsinaname
whatsinaname's picture

yes, what is going on ? Even India has cut rates 3 times in the last few months despite fairly bubbly Brent pricing.

And its not like food prices have come down much there either.

Tue, 05/07/2013 - 10:02 | 3537371 Rainman
Rainman's picture

Fukkit.....Dow crosses 15,000 and will never go down again !

Tue, 05/07/2013 - 09:42 | 3537297 Unprepared
Unprepared's picture

What about those old structured interest-president swaps?

Tue, 05/07/2013 - 09:42 | 3537301 TLT
TLT's picture

And in Brazil the Central Bank just raised rates. Can anyone believe?

All EM should apply ZIRP now. Why pay 8-10% if you can pay 0%? And if you can't, there's always the printing press avaiable.

The dollar and yen collapse would come sooner.

Tue, 05/07/2013 - 09:45 | 3537314 fonzannoon
fonzannoon's picture

Did Brazil actually just raise rates?

Tue, 05/07/2013 - 09:47 | 3537317 TLT
TLT's picture

April 17th, to 7,5%.

Tue, 05/07/2013 - 09:42 | 3537302 mayhem_korner
mayhem_korner's picture

 

 

u da man!

Tue, 05/07/2013 - 09:44 | 3537309 SheepDog-One
SheepDog-One's picture

What....no *clicks* in his name?

Tue, 05/07/2013 - 10:13 | 3537398 Dr. Engali
Dr. Engali's picture

 +1 lol

Tue, 05/07/2013 - 09:44 | 3537310 fonzannoon
fonzannoon's picture

I dare anyone on here to name another person who has the letter U as the third letter in their first and last name.

bonus points if you can find a person who has that and also has the word "dung" in their name.

Tue, 05/07/2013 - 09:51 | 3537328 dick cheneys ghost
dick cheneys ghost's picture

Baurack O'dungholio

Tue, 05/07/2013 - 09:50 | 3537330 Rainman
Rainman's picture

Huusein Obumba ....  what do I win ?

Tue, 05/07/2013 - 09:55 | 3537352 Dr. Engali
Dr. Engali's picture

How about  Baruch Hussein Obummer? is that close enough

Tue, 05/07/2013 - 10:01 | 3537370 kito
kito's picture

hey doc i havent taken the dip into the gold-en pool yet....i have a feeling we are going to see lower lows coming this year....im thinking 1200 will be my buy in........

Tue, 05/07/2013 - 10:07 | 3537380 Dr. Engali
Dr. Engali's picture

Maybe it will..who knows. I just add to positions when the cash is available. Don't get cold feet if it does.

Tue, 05/07/2013 - 09:57 | 3537355 kito
kito's picture

mao ze-dung?????? 

Tue, 05/07/2013 - 10:00 | 3537365 Bearwagon
Bearwagon's picture

According to Akak that's spelled "Mousy Dung".

Tue, 05/07/2013 - 10:33 | 3537456 Peter Pan
Peter Pan's picture

Raul Hauptman

Google it, it is a real name.

Tue, 05/07/2013 - 09:45 | 3537311 rsnoble
rsnoble's picture

They'll have high confidence all the way to negative rates.

Tue, 05/07/2013 - 09:49 | 3537324 SheepDog-One
SheepDog-One's picture

We be CONFIDENT! 

Damn, so sick of hearing that....'Buck up lil pilgrims! Sure your life is shit and you'll die poor guaranteed, but us few bankers are really having fun! Be happy for us!'

Tue, 05/07/2013 - 09:49 | 3537325 Ban KKiller
Ban KKiller's picture

Iowa central bank to cut rates in follow up move to Kenya. Arkansas to join Union...

Tue, 05/07/2013 - 09:49 | 3537326 youngman
youngman's picture

Are they called Obamabucks?   Do they have the ONES picture on them...

Tue, 05/07/2013 - 09:54 | 3537345 Sudden Debt
Sudden Debt's picture

sounds better than plantation tokens...

Tue, 05/07/2013 - 09:50 | 3537329 LawsofPhysics
LawsofPhysics's picture

Ah yes, the rest of the world saying "fuck it, whatever you print we can print better".  The gig is up, got sound money?

Tue, 05/07/2013 - 09:51 | 3537333 Dr. Engali
Dr. Engali's picture

Barack would be proud of his fellow countryman.

Tue, 05/07/2013 - 09:51 | 3537336 Sudden Debt
Sudden Debt's picture

Just imagine what would happen if America cut it's rates from 9,5 down to 9,5%...

Tue, 05/07/2013 - 09:53 | 3537341 Never One Roach
Never One Roach's picture

Prof. Njuguna S. Ndung'u....must be a Princeton Man.....

Tue, 05/07/2013 - 09:54 | 3537342 i-dog
i-dog's picture

 

"has never worked at Goldman Sachs"

Hasn't even worked at a bank...and now he's running the show! Should end well....

Tue, 05/07/2013 - 09:56 | 3537351 Sudden Debt
Sudden Debt's picture

if he ever discovers the art of printing money, the Kenian economy will surpass the American economy WITHIN 5 YEARS!!!

Tue, 05/07/2013 - 10:17 | 3537410 mess nonster
mess nonster's picture

Well, neither did Bernanke, although he WAS LLoyd Blankfien's roomate at Harvard, which counts as "banking experience".

Bernanke attended Harvard University, where he lived in Winthrop House with the future CEO of Goldman Sachs, Lloyd Blankfein,

-wikipedia

Well, it was rumored both Ndung'u and Blankfein were supposed to resign last year...

 

Tue, 05/07/2013 - 10:30 | 3537446 Quinvarius
Quinvarius's picture

He certainly fkd Soros right in the ass when he went to 18%.

http://www.xe.com/currencycharts/?from=KES&to=USD&view=10Y

 

 

Tue, 05/07/2013 - 11:36 | 3537664 LFMayor
LFMayor's picture

you know the old joke "Death by booga-booga"?

Tue, 05/07/2013 - 09:54 | 3537343 e m m
e m m's picture

Kenyasian policy!

Tue, 05/07/2013 - 10:17 | 3537412 Downtoolong
Downtoolong's picture

those who have nothing better to do than forecast what the Kenya central bank will do

How do I get a job like that?

Tue, 05/07/2013 - 10:37 | 3537470 Urban Redneck
Urban Redneck's picture

It's the bankster equivalent of manning a radar station in Alaska.  

So sell your soul and then piss off the Devil.

Tue, 05/07/2013 - 10:35 | 3537464 Debugas
Debugas's picture

Any news on Zimbabwe CB ?

Tue, 05/07/2013 - 10:57 | 3537536 pragmatic hobo
pragmatic hobo's picture

Zimbabwe do not have central bank. Mr Mugabi is their one man wonder with his own printing press, running it day and night long before the likes of bernanke took notice.

Tue, 05/07/2013 - 10:55 | 3537531 Temporalist
Temporalist's picture

Prof. Njuguna S. Ndung'u has raised additional capital for his country via a mass email campaign declaring himself a prince and asking for "moneys" to be deposited into his unaccessible account which is being held for him with billions of US dollar but if you send just a few thousand today you will have it returned to you ten fold.

Tue, 05/07/2013 - 11:11 | 3537582 web bot
web bot's picture

Coffee momentarily ejected from my nose when I read this! Hilarious!

+1000 for comedy.

Tue, 05/07/2013 - 10:57 | 3537534 natty light
natty light's picture

Annnd it's Gono.

Tue, 05/07/2013 - 11:15 | 3537576 web bot
web bot's picture

Wow!!! Kenya has sure moved up in the world... they've given the world the USA Kenysian President... and now the next likely replacement of Ctrl-P at the Marriner Eccles building. Definitely a black swan event...

Tue, 05/07/2013 - 11:35 | 3537653 LFMayor
LFMayor's picture

Just wondering... is their stock exchange building constructed of thatch bundles daubed with cow shit?

Simon Black would know I bet, I'm sure he's base jumped off of it at least once during his adventures.

Tue, 05/07/2013 - 16:16 | 3538607 deepdish
deepdish's picture

There are some interesting things about Kenya:

 

1) A lot of the population are farmers and make their own food and sell the surplus at the market. This means that the average Kenyan farmer keeps most of his income, as they do not pay taxes on the food they eat or the food they sell to neighbors or markets.

2) The banking system is not developed in the same sense (you could argue destroyed) as in the Western world. This means that the farmers (majority of the population) or other workers do not get loan to their homes. A positive consequence of this is that most homes, althogh modest, are financed by savings and equity.

3) The government do not redistribute the people's money to people who do not work or other group. This means that the local communities actually help eachother when someone need it, and thete is a will to help the neighbor (as opposed to countries with welfare states, where no one want to help anyone because the government will help them). 

4) The Kenyan laws respect property rights. 

 

 

I actually think the people in a country like that are quite lucky.

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