Don’t depend on monetary policy rate alone in curbing inflation – Lord Mensah to government

A lecturer at the University of Ghana, Professor Lord Mensah, has advised the government to look for other alternative ways in curbing inflation.

The Bank of Ghana after its 110th Monetary Policy Committee for the year 2023 has announced an increment of the Monetary Policy Rate on 100 basis points to 28 percent.

According to BoG, the MPC sees the need to remain vigilant and moderate liquidity in the system to underpin macroeconomic adjustments taking place to drive inflation on a downward path.

Commenting on the new policy rate on Starr Today with Joshua Kodjo Mensah Monday, Mr. Mensah added that the government should look at the fiscal discipline – how the government spends rather than target the expenditure in a way of producing food.

“You can also spend in ways of getting food to the market which ultimately results in getting cheaper prices of food in the economy. If you look at the inflation aggregation you can see that it is food that is leading together with transport. So with all these put together it tells you that if we spend in a prudent way it will have a way of controlling our inflation."

“It is a system that is being managed; you shouldn’t look at it from one side. Day in and day out I keep on drumming that economic theories have moved away from inflation being managed by just increasing monetary policy and all that,” Prof. Mensah stated.

He added that with the way the government is managing the economy interest rate will not come down anytime soon.

“The consequences will be that inflation will always be on the high side and it will deny the private sector the kind of funds they need to grow the economy. Because the private sector will be competing with the government and instead of the Central Bank to channel the funds through the banks to get to the private sector they will prefer directing it straight to the government,” he stated.