Ghana’s soaring inflation is a complicated one – BoG governor
BoG’s current approach to dealing with inflation not yielding expected outcomes - Togbe Afede XIV
The Paramount Chief of the Asogli Traditional Area, Togbe Afede XIV, has called on the Bank of Ghana to implement drastic measures aimed at stemming the country’s rising inflation rate.
The Ghana Statistical Service recently announced the country’s inflation reached 23.6 percent for April this year from an earlier 19.4 percent recorded in March 2022 – the highest recorded in 18 years.
The rate has since the beginning of this year been surging significantly with monetary policymakers [Bank of Ghana] indicating they are baffled by this development while optimistic of addressing it.
But Togbe Afede XIV believes the central bank must rather adopt a much more stringent approach in helping to deal with the situation.
Speaking during an engagement with board members of the National Petroleum Authority, the Paramount Chief of the Asogli Traditional Area said the current approach being adopted by the Bank of Ghana in addressing inflation is not yielding the expected outcomes.
He also accused the Bank of Ghana of veering off from its core mandate in dealing with price and exchange rate stability which play a key role in the determination of macro-economic objectives of growth and job creation.
“Bank of Ghana (BoG) has always tried to fight inflation with high interest rates, but it has not worked. The problem is they increase interest rates based on recorded inflation, among others, which is effectively past price changes, instead of expected inflation. Their approach inadvertently transmits past trends into the future, in a self-fulfilling prophecy,” Togbe Afede XIV is quoted to have said by Citi Business News.
“We need, as a nation, to look critically at how we fight the battle against inflation. Assuming interest rates are raised again today, your sector participants would also need to increase their prices because they need to transfer the extra cost of funds to consumers in order to maintain their margins. Our interest rates are already very high. So, I’m surprised some are already calling for increase in the policy rate. It just will not work!” he lamented.
Togbe Afede XIV’s comments are ahead of the Bank of Ghana’s policy rate decision after it just concluded its third and 106th MPC meeting aimed at reviewing economic developments in the country.
At its second meeting of this year, the central bank hiked its monetary policy rate to 17 percent from 14.5 percent – a move which was meant to deal with the current economic conditions such as include fiscal pressures, inflation, exchange rate volatility among others.
