BoG ended the year on a failed monetary policy - Dr. Kwakye opines

The Director of Research at the Institute of Economic Affairs, John Kwakye, has described the Bank of Ghana's monetary policy rate as a failure.

In a series of tweets on his account, he wrote: "BoG ended the year with a failed monetary policy, resulting in inflation of 22% in October, a PR of 27%, and a depreciation of 23% in November (27% in October)."

He added that the Central Bank's rush to stabilize the cedi a few days before the 2024 election is questionable.

"Notably, BoG's reserves declined to $7.68bn in October from $7.83bn in September due to the Bank's stepped-up intervention in the FX market. Why would the Bank rush to appreciate the cedi a few weeks before the election? Whose interests is the Bank serving?" he asked.

The Bank of Ghana (BoG) has decided to maintain the policy rate at 27 percent.

According to the Governor of the Central Bank, Dr. Ernest Addison, domestic macroeconomic conditions are stable, and the implementation of the International Monetary Fund External Credit Facility (IMF-ECF) Programme is on track.

During the last Monetary Policy Committee meeting, the average inflation forecast for the upcoming year (2025), which was initially at 19.0 percent, has now increased slightly to 20.1 percent.

The timeline for inflation to return within the target band of 6-10 percent has been slightly pushed forward to Q4 2025 from the previous forecast of Q3 2025.

Dr. Addison mentioned that the short-term strengthening of the currency will have positive effects on future price developments.

"Under the circumstances, the Monetary Policy Committee decided to keep the policy rate unchanged at 27 percent," Dr. Addison stated via a press statement released on November 29, 2024.

The Governor of the Bank of Ghana noted that the growth performance has been strong so far, and leading indicators suggest even stronger growth in the second half of the year.

Additionally, both business and consumer confidence are gradually improving with financial sector inflation expectations expected to remain stable.

The Central Bank’s reserves have also been accumulating sufficiently to instill confidence, and the currency is showing signs of appreciation.

SSD/MA

Watch the latest edition of BizTech below:



Click here to follow the GhanaWeb Business WhatsApp channel