The Governor of the Bank of Ghana, Dr. Ernest Addison, has promised that his outfit will resolve to tame inflation in order to reduce the rising interest rates.
Though he admits that the rising inflation rate has come as a surprise because of the recent increase in the Policy Rate by 2.5 percent which failed to control prices of goods and services, he’s confident he and his team will find an appropriate policy to address the rising inflation.
“It’s an issue which in a sense is baffling to all of us. A year ago, inflation in Ghana was near single digit, particularly we were at 7.5% and then we find ourselves a year later in high double digits. It’s a very complicated environment, as you yourself are aware we have come out of COVID-19. But Ghana, fortunately, was able to weather the impact of COVD well without recording high-interest rates”, he told Bloomberg.
“This week, the MPC will be meeting. I do not want to preempt what the Committee will decide but I think is a very complicated issue”, he explained.
“As we said, inflation is nearly 24%. We need to take a position on what to do with the current policy rate at 17%”, he added.
The Ghanaian economy was battered by the COVID-19 pandemic but has since recovered swiftly, but faces challenges from both domestic and external pressures.
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“It seems as if the economy has picked up significantly with a positive growth rate of 5.4%. At the Central Bank, we have anticipated this”.
“In November last year, we raised the policy rate by 100 basis points [2.0%], and then we were rather surprised by the inflation rate which came out later on. After that in February [2022] in particular which triggered the 250 basis points [2.5%] adjustment in the policy rate”, he pointed out.
Dr. Addison also added that the Central Bank will continue to support the Bank of Ghana to stabilize the economy.
“The role of the Central Bank in stabilising has been very clear. I mean we have a limited set of instruments trying to manage liquidity and trying to manage interest rates, and that is what we have done in the last year or so.”
Credit: Business Analyst