A senior lecturer at the University of Ghana, Professor Godfred Alufar Bokpin, has stated that even though the Bank of Ghana’s efforts to address the rising inflation rates by increasing the monetary policy, the timing for its recent hike is wrong.
The Bank of Ghana increased the monetary policy rate by 250 basis points to 24.5% on October 6, 2022.
Prof. Bokpin explained that what the Bank of Ghana currently lacks is the right positioning of the policy rate to effectively deal with the current economic crisis.
“We have said that where we are, the triggers are much more from the fiscal side and therefore there is a limit to how far you can deploy monetary policy largely of course to eliminate the demand-related inflationary pressures but where I disagree with the Bank of Ghana is the timing of their policy rate adjustment that seems to lack in terms of positioning it to anchor inflationary expectation, I think we missed it,” he is quoted by myjoyonline.com.
Ghana’s current inflation currently stands at 33.9% as of August 2022, the highest it has been in 21 years.
However, the economist identified that Ghana’s problem has to do largely with the fiscal side of the economy.
Therefore, the Bank of Ghana should not be blamed entirely.
“We may be missing the point if we blame the Bank of Ghana so much and leave out the big elephant in the room which is the fiscal side where the political economy is dominant and where politicians and managers of the fiscal side are to be blamed for the current mess that we are in.
“If you look at Bank of Ghana’s statement for the past year, you will see a certain posture of Bank of Ghana that suggests that they are unhappy with the way the fiscal side is being managed,” he explained.