I’m disappointed - Dr Kwakye on review of monetary policy rate from 30 to 29%

Following the reduction of the monetary policy rate by 100 basis points to 29 percent from the initial 30 percent, the Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has expressed disappointment at the move taken by the Monetary Policy Committee.

He elucidated that the committee was to review the policy rate downwards by at least 250 basis points.

Speaking at the National Economic Summit hosted by the Leader of Movement of Change, Alan Kyerematen, the IEA boss said the high interest rates were suffocating the local economy as businesses cannot thrive.

He further said his call for the reduction in the policy rate was necessary because it was the driver of high interest rate and inflation in Ghana.

“Let me say something about the monetary policy rate which is 29 percent because that is the driver of other interest rates…so I was very disappointed when the MPC reviewed the policy rate from 30 percent to just 29 percent,” Dr Kwakye said.

He added that, “I was expecting them to decrease it by at least 250 basis points because that is the driver of inflation, interest rates in this country.”

The Bank of Ghana Monetary Policy Committee (MPC) on Monday, January 29, 2024 announced a cut in the key policy rate by 100 basis points.

This means that the rate that commercial banks use as a reference for lending has been reduced from 30 to 29 per cent after six months.

The MPC expects headline inflation to ease to 15%±2% by the end of 2024 and gradually trend back to within the medium-term target range of 8%±2% by 2025.

“The Committee decided to reduce the Monetary Policy Rate by 100 basis points to 29 percent, noting the emerging recovery but emphasising the need to maintain a strong policy stance for disinflation gains consolidation”.

Governor of the Bank of Ghana, Dr Ernest Addison, made this known at a press briefing following the 116th MPC meeting in Accra.

SA/NOQ