Bank of Ghana not cause of cedi depreciation, tackle exports – Dr. Kwakye

Inflation should be dealt with from the supply side - IEA

Inflation hits 27.6% in May - GSS

Cedi depreciation is not the fault of Bank of Ghana

Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye has said the woes of the cedi can be dealt with if exports are boosted.

It is in this light that he notes that the Bank of Ghana (BoG) should not be blamed for the cedi’s depreciation.

He was speaking at the 3businesscolloquium organized by Media General in Accra.

“The exchange rate is not about monetary policy alone. When people blame the Bank of Ghana for not stabilizing the exchange rate, I see that they don’t understand.

“Bank of Ghana alone cannot stabilize the exchange rate, it is about how much export we are producing as a country, how much are we earning from exports, that one bank of Ghana doesn’t determine it. Of course, they can help, they have to work with the government to put in policies to do that. Bank of Ghana just manages the reserves that we all we receive.”

He also explains that inflation should be targeted from the supply side of the market.

Meanwhile, inflation for May this year hit 27.6 percent - the highest recorded in almost 18 years since 2004.

Dr Kwakye on his part said, “Inflation is coming mostly from food, fuel, and the exchange rate is also a factor, so they are mainly supply side of the factors. That type of inflation, you can’t fight with a demand management tool effectively.

“So, we have said that the central bank and government should work together to address to target the very source of the inflation. We are not saying do away with the inflation-targeting framework,” he added.

SSD/MA