Why interest rate cap was bound to fail

Dr Patrick Njoroge, CBK governor. PHOTO | SALATON NJAU | NMG
Central Bank of Kenya Governor Patrick Njoroge speaks during a press conference at Villa Rosa Kempinski Hotel in Nairobi on September 13, 2017. PHOTO | SALATON NJAU | NMG 

The interest rate control regime has not worked because we were trying to treat a chronic malady by applying a palliative.

It does not-therefore- surprise me that the Governor of the Central Bank of Kenya (CBK), Dr Patrick Njoroge, says that he intends to push for the repeal of the rate-capping law.

Speaking on Wednesday, Dr Njoroge revealed that a government study had demonstrated that the rate caps had impacted badly on economic growth. I can’t wait to read the contents of this new study.

I hope that its terms of reference were not restricted merely to providing justification to the Treasury and the Central Bank of Kenya to start campaigning for abolition of interest rate caps.