Ratten's contract expires at the end of this season and his future had been a hot topic of discussion for much of the early part of the year.
"We want to play finals, that's what I told him to do. He's doing that, he's been terrific this year, Ratts. We've got some new assistant coaches on board and we just want our club improving," Kernahan told OneHD's One Week At A Time.
"He knows that and Ratts and I are really comfortable with our position and his position. I've got great confidence Ratts will get the job done."
Kernahan rejected suggestions that he said nothing short of a finals win would save Ratten.
"A journo asked me earlier this year and it wasn't about Brett Ratten. He asked what can the Blues do this year? I said we've played finals the last two years and haven't won one," he said.
"It's pretty realistic that our aim should be winning a final. And I think realistically all clubs aim at the top four. Once you've played finals, you need to make the top four for a springboard to win a flag."
Kernahan said his personal history with his former teammate would have no bearing on any negotiations.
"Ratts and I played footy for a long time together. We're mates but it's all business down there," he said.
"We said at the start of the year we'll make the call at the end of the year. Ratts is happy with that position and we'll do that."
