NAIROBI, Kenya, Jun 16 – Central Bank of Kenya Governor nominee Patrick Ngugi Njoroge says he will be looking to tightening interest rates to mitigate the depreciating shilling and temper inflation.
Njoroge who was nominated to the post by President Uhuru Kenyatta told a parliamentary Committee on Finance that he will use his experience in ministries of finance and planning to develop a positive monetary philosophy.
“This is indeed a sine qua non (a must do) because they need to have very high returns because they are unsure where the inflation is going and they are going to lose it all if inflation surges.”
He said he will seek to encourage commercial banks to change their business module; this is after MPs complained banks were exploiting Kenyans through high rates.
“We cannot allow the interest rate to be driven in a way that is damaging the economy. This is why we will need to go back to the commercial banks and one of the things that I would insist on is their innovation and giving them confidence that we can move on with market based solutions that are sensitive to their own profits but at the same time provides appropriate pricing for credit and also appropriate or higher interest rates for depositors, “the CBK Governor nominee said.
Njoroge said he would quit his post as the Advisor to the IMF Deputy MD once his nomination is approved adding that he is opposed to a legislation to control interest rates spread.
“It would be a mistake and a big mistake for that matter, to believe we can control interest rates by law. One governor thought of it like a Russian roulette, so you can get it right today and the economy will move but you’ll get a point where you will blow up the whole system. In a sense, this is why we moved away from the price controls,” Dr. Njoroge explained.
However, committee chairman Benjamin Langat and Butere MP Andrew Toboso questioned whether his declaration that he did not have any investments and bachelor status being 54 years old meant that he was afraid of making risky decision.
Dr. Njoroge told that committee that he is single by choice because he was pursuing personal ideals.