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Kenya: Central Bank Governor must step aside – Lawmakers
Ndung’u was not immediately available to comment. An official at the bank said he could not comment.
At the time of the shilling’s weakening, analysts said that policymakers in Kenya were slow off the mark in tackling surging consumer prices, the battered currency and a crisis of confidence in the market.
Ndung’u was marked the least effective policymaker in Africa by a Reuters survey of 10 sub-Saharan analysts for failing to spot and act against rising price pressures and then presiding over the shilling’s collapse.
The governor’s problems began in January 2011 when he cut interest rates in the face of accelerating inflation. That move raised concerns about his willingness to take tough policy action ahead of an election due by March 2013 at the latest.
As inflation shot into double digits, the shilling tumbled 25 percent to 107 to the dollar, undermining Kenya’s image as one of Africa’s most stable economies.
Ndung’u raised the key lending rate by a shock 400 basis points in October, launching a round of hikes that has strengthened the currency back to below 90 to the dollar.
The central bank also bolstered the shilling by changing rules for borrowing from the discount window and how the rate was calculated, embarking on intense mopping up of shilling funding and curbing commercial banks’ foreign exchange exposure.
