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BoG wrong for using high interest rates to tame inflation - Togbe Afede XIV

79126962 Togbe Afede XIV

Tue, 13 Dec 2022 Source:

Paramount Chief of the Asogli Traditional Area, Togbe Afede XIV, has stated that it is wrong for the Bank of Ghana to adopt the measure of raising interest rates to tame inflationary pressures.

Making a case for his submission, Togbe Afede XIV compared Ghana's minimum wage to that off the United Kingdom which is GBP9.50 an hour or GBP76 for an 8-hour workday while the wage in Ghana is GH¢14.88 per day, less than GBP1.

In an opinion piece sighted by GhanaWeb Business, Togbe Afede XIV wrote, “it is also wrong for BoG to persist in trying to tame inflation in Ghana using high-interest rates as could be successfully done in a rich country like the UK.”

“These high interest rates made it difficult for businesses to borrow to invest in the real sectors of the economy to achieve the value-addition we crave. It also perpetuated our import dependence, while making it difficult for local entrepreneurs to borrow, invest and increase local ownership of the economy,” he noted.

He further accused the BoG officials of inadvertently frustrating efforts aimed at restructuring the Ghanaian economy.

“Bank of Ghana officials have inadvertently frustrated the restructuring of the economy, which they themselves have identified as the solution to our balance of payments deficit and currency depreciation problems.”

“It is difficult to see how policy rate increases can fight cost-pushed inflation resulting from food or crude oil price increases or increased taxes on petroleum products. Sadly, even at the height of the COVID-19 pandemic, when income levels had fallen world-wide, and stimulus packages were being implemented everywhere to boost economic activity, BoG still ensured that we suffer under strangulating high interest rates,” the economist added.

While indicating that Bank of Ghana's monetary policy decisions have not helped in improving economic policy measures over the years, Togbe Afede XIV said it has succeeded in maintaining a growth-stifling 'high inflation – high interest rate' environment adding that "it has also created the most profitable banking sector in Africa, if not the world, all with disastrous consequences for the cedi.”


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