14.5% policy rate to be maintained - IEA predicts

IEA John Kwakye Dr. John Kwakye, Director of Research at the Institute of Economic Affairs (IEA)

Wed, 26 Jan 2022 Source: www.ghanaweb.com

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The Institute of Economic Affairs is predicting that the Bank of Ghana’s Monetary Policy Committee (MPC) will maintain its policy rate decision at 14.5 percent, a B&FT report has said.

The central bank’s MPC on Tuesday, January 25, 2022, began its first scheduled meeting of the year to review economic developments in the country.

But ahead of the BoG’s decision, Director of Research at the IEA, Dr. John Kwakye believes that despite a surge in inflation, increase in foods prices and fuel price hikes, the MPC is not likely to review its rate upwards.

“Looking at the balance of risk between inflation and growth, my judgement is that the inflation risk outweighs the growth risk at this time, and on that score, you would say that the policy rate should be adjusted upwards," Dr Kwakye is quoted by the B&FT Newspaper.

He continued, "...However, recalling that the rate was increased by 100 basis points just two months ago, at the last meeting, the likelihood of another increase is low.”

“My expectation is that the Committee will play it safe by holding the rate as it is,” Dr Kwakye is quoted to have said this speaking during a round-table discussion on the theme: “Making Monetary Policy in Ghana More Fit-for-Purpose.”

The IEA Director of Research however said a move to maintain the policy rate, is expected to allow the MPC to have a clear view of the inflationary trend and decide the way foward at its next meeting for the year.

Source: www.ghanaweb.com
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