CENTRAL Bank governor Patrick Njoroge yesterday said much has been achieved in stabilising the Kenya shilling, prices and
interest rates in his 100 days in office.
This, he said, was an indication that measures by the Monetary Policy Committee were producing the desired effect in reducing “market indiscipline” in the financial sector, a major cause of market instability.
“We have been pursuing very tight monetary policy because the overall liquidity conditions were quite high. We have deployed measures such as prudent liquidity management, increasing the Central Bank Rate and the Kenya Banks Reference Rate,” he told journalists at his first press conference since assuming office..
“Also we have been making interventions in the the foreign exchange market to stem volatility of the shilling.”
He said the CBK has a stock of $6.18 billion in foreign exchange reserves plus the $611 million International Monetary Fund's precautionary buffer for any short term shocks.
“The reserves are just under four months of import cover and we will continue intervening in the market to enhance the flexibility of the exchange rates,” he said.
The MPC, chaired by Njoroge for the first time, raised the CBR from 10 to 11.5 per cent in its July meeting while the KBRR was revised from 8.54 to 9.87 per cent. These rates were left unchanged in the MPC meeting last week.
The governor said the previous measures have helped bring down inflation close to the five per cent target.
According to the Kenya National Bureau of Statistics data, overall inflation fell from 7.03 per cent in June to 6.62 per cent in July and further to 5.84 per cent in August.
Njoroge said procurement of the new generation currency is ongoing and CBK has partnered with the National Museum of Kenya for the provision of pictographs to be used on the notes and coins.
He said the CBK Bill will be tabled in parliament soon adding “it will lead to an improvement in the way we engage with the financial institutions.”
“We are pushing up bank supervision in a bid to ensure the stability of the financial sector. Any emerging crack in the financial sector can have a catastrophic effects and that's why we recently ordered the closure of Dubai Bank. We want all actors of financial sector institutions to respect and follow market discipline,” he said.