Maintain MPR to align with socio-economic policies – Prof. Quartey to BoG

Economist, Prof. Peter Quartey, says he believes the Central Bank will maintain its monetary policy rate for a fourth consecutive time.

According to the Director of Research at the Institute of Statistical, Social and Economic Research (ISSER), the expectation is attributed to factors that lead to a reduction of the rate.

The Monetary Policy Committee (MPC) of the central bank on Wednesday, November 18, 2020, began its deliberations to review developments of Ghana’s economy and announce its decision of the policy rate.

At the central bank’s last meeting in September this year, it kept its monetary policy rate unchanged at 14.5 percent.

Governor of the Bank of Ghana, Dr Ernest Addison, explained the decision was based on the drivers of economic growth returning to normal prospects for a good recovery.

“Consumers seem to be responding to the gradual lifting of restrictions which provides some scope for meaningful economic activities. Business confidence also increased, but yet to reach pre-lockdown levels,” the Governor explained.

But in an interaction with GhanaWeb on Wednesday, November 18, Prof. Peter Quartey explained an increase in the policy rate will not be appropriate towards easing the cost of doing business.

“I think the policy rate will be maintained and I am convinced a high policy rate will not align with government’s polices of reducing the cost of doing business. Government’s policy now is to stimulate the private sector through a reduced cost of doing business,” he told GhanaWeb.

“Secondly, the factors that lead to a change in the policy rate have not changed much, exchange rate has remained relatively stable, there’s not too much demand pressure, Gross Domestic Product growth has been stable, inflation is declining marginally and inflation expectations have also not increased,” Prof Quartey added.