Dr John Kwakye, Director of Research at the Institute of Economic Affairs (IEA), has voiced dissatisfaction with the Bank of Ghana (BoG) ‘s Monetary Policy Committee (MPC) for maintaining the policy rate at 29 percent despite recent improvements in inflation rates.
In a statement on his platform, Dr. Kwakye expressed surprise at the MPC’s decision, given that inflation had dropped to 22.8% in June 2024 from a previous high of 54%.
He suggested that the BoG’s reluctance to adjust the policy rate downwards might indicate doubts about its effectiveness in influencing economic conditions.
The MPC’s decision marks the third consecutive time the BoG has opted to keep the policy rate unchanged at 29%, as Governor Dr. Ernest Addison announced during the 119th MPC press conference in Accra.
Dr Addison defended the decision, highlighting the central bank’s commitment to balancing economic growth and inflation control in Ghana’s evolving financial environment.
He cited recent data from the Ghana Statistical Service indicating a slight decline in headline inflation to 22.8% from 23.1% in May, continuing a disinflation trend since January 2023.
The BoG reduced the policy rate by 100 basis points to 29% in January 2024 and has maintained it since then, following a comprehensive assessment of macroeconomic developments over subsequent months.
The stability in the policy rate is expected to stabilize commercial banks’ lending rates to businesses, fostering a predictable financial landscape for corporate borrowers amid ongoing economic conditions.
