MPC gets new team ahead of signal rate review

BT ReporterSep 19, 2018898

Former Permanent Secretary Dr Margaret Chemengich has been appointed to join the Central Bank of Kenya’s Monetary Policy Committee (MPC).

Others named as members of the key team by National Treasury Cabinet Secretary Henry Rotich are Dr Benson Akong’o Ateng, Prof Jane Wanjiku Kabubo-Mariara and Humphrey Mugambi Ndwiga. Their appointments took effect on August 24.

Dr Chemengich, currently a director at FEP Holdings and Credit Bank, served as Finance Permanent Secretary before she was replaced in 1999 by Martin Oduor-Otieno, who part of the dream team assembled by former President Moi to help turn around the country’s economy and “sue for peace” with the donor community.

She is an independent researcher consulting mainly on regional integration, development policy and management. She is also a Board Member of African Research and Resource Forum and Trustee at KCA University.

Dr Ateng’, who holds a PhD in economics, ‘has vast experience in the field of economics gathered while working at the World Bank.

He is currently the chairman, Department of Economics and Development Studies at the Technical University of Kenya. In 2014, Dr Ateng’ was appointed the chairman of the Consolidated Bank of Kenya by President Uhuru Kenyatta.

Prof Kabubo-Mariara is the current Executive Director of the Partnership for Economic Policy (PEP). She is also a Professor of Economics of the University of Nairobi. She is a member of the German Institute of Global and Area Studies (GIGA) Advisory Board and Interim President of the African Association of Ecological Economists (ASEE). She is also a former Director of the School of Economics, University of Nairobi. She has previously served as an acting Deputy Vice-chancellor for Research, Production and Extension at the University of Nairobi.

Hitherto, the MPC consisted of Dr Njoroge, Deputy Governor Sheila M’Mbijjewe, National Treasury Principal Secretary Kamau Thugge, Charles Koori and John Birech.

The MPC, which is shared by Central Bank of Kenya Governor Patrick Njoroge, meets at least every two months to make decisions aimed at ensuring that the supply of money in the economy is consistent with growth and price objectives set by the government. The objective of monetary policy is to maintain price stability in the economy. Price stability refers to maintenance of a low and stable inflation.

All eyes will be on the MPC when it meets next Tuesday. While the committee in its last meeting on July 30 said there is room for a more accommodative stance, the situation is likely to change if MPs fail to raise a two thirds majority to defeat President Uhuru’s proposal to impose 8% VAT on petroleum products and the repeal of the law capping commercial borrowing costs .

John Ashbourne, a London-based economist at Capital Economics Ltd, told Bloomberg. the MPC “is unlikely to move again in the short term given the risk of an uptick in inflation.”

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At its last meeting on July 30, the MPC decided to lower the Central Bank Rate (CBR) to 9.00% from 9.50%, saying inflation expectations were well anchored within the target range, and that
economic growth prospects were improving. Furthermore, it said economic output was below its
potential level, paving some room for further accommodative monetary policy.