The much expected economic recovery in Q3 2009 appeared to be a mirage as extraneous shocks kept the economy in the doldrums. An aggravation of the weather conditions brought about serious food shortages, badly dented water supply and significantly reduced hydro power generation.  This in turn increased overall cost of living and doing business, as the cost of most inputs went up. The government finances were also strained as importation of food resumed and emergency packages to ameliorate the impact of the drought on livestock farmers were put in place. The Monetary Policy Committee report after the September meeting best captured the effects of the drought on the economy, terming it “deleterious”. The committee continues to maintain an easy money stance to stimulate the economy.  Read more...