BoG’s “risk premium” blamed for consistently high monetary policy rate

An article by Jeff Sampong argues that the Bank of Ghana's high policy rate is largely due to a “risk premium” included in rate calculations, which raises borrowing costs and stifles industrial growth.

Reducing or eliminating this risk premium could reduce the rate to 15%, supporting a low-interest environment.

Sampong suggests amending the Bank of Ghana Act to add full employment as a mandate alongside inflation control, similar to the U.S. Federal Reserve.

The BoG recently reduced its policy rate to 27%, citing an improved economic outlook, which may encourage borrowing and economic recovery.

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